Start a Discount Card Business

A discount card is a card that entitles the card owner (member) discounts at a variety of establishments. Start your own discount card business.

The typical discount card business goes like this: The owner of the discount card business signs up various vendors which agrees to give anyone bearing the discount card a discount on products and services, the owner of the discount card sells the card to people looking to get discounts at the various establishments. The vendors who have signed up basically gets advertising in exchange for the discounts they are giving up allowing the discount card business owner to make money selling discount card memberships.

Terminology used
Vendors – Businesses who sign up to your card agreeing to offer the bearer a discount
Members – People who sign up for your discount card as a member
Agents – People who sell card memberships and get a commission for every person they sign up

Business Model
Once the discount card business owner has signed up enough businesses, they will then sign up members who pay an annual subscription. They will also print a book with all the discounts in to give to new members as well as create a website directory containing all the companies who offer discounts.

Growing this business
The fastest way to grow this business is to sign up agents to market the card, if the card costs R300 a year, you can give the agent R100 – R150 for every person they sign up. This will still allow you to be profitable as all your expenses are: plastic cards, printed books and website hosting wont amount to much.

The card
The card used is very low tech, basically just printed PVC cards, with the discount card name on and if you want the valid date. This type of card is usually just marketed to small businesses to sign up, where once the card is shown the discount is applied. So it probably won’t be a good fit with big businesses who would need to integrate the card into their POS (point of sale systems) which they are unlikely to do if you are a small player (and you would need more complicated cards as well).

Why I say if you want to the valid date as in years past the billing model used to be, that the card is valid indefinitely and in order to cancel the membership (you were billed via debit order) you had to return the card. But I think in modern times, it may be better to let the card run year to year.

Signing up agents
Remember how I said you can grow this business by letting people market the card for you. This can be a big part of the business if you have lots of agents marketing your card on a commission basis.

Choose a niche
This type of membership card is much easier to market if you choose to focus on signing up vendors in a niche, which will then be much easier to market to members, ideas include:
Home maintenance
Small Business Services
And so on

Enforcing Compliance
When you sign up new vendors they have to sign a contract saying that they will give your members a discount from the normal price for a set period of time. But what happens when you get complaints? You need to put policies in place to deal with this.