H&R Block adds partners, recalculates Refund Rewards. H&R Block is using new math this year.
The Kansas City-based company kicks off four joint promotions this month with a “Millionaire” fifth set for February. The ambitious slate is Block’s biggest push in consumer promotions and follows last year’s $100 million marketing effort to launch 94 H&R Block Financial Centers (March PROMO). Block now has 200 offices, 120 of them offering tax, mortgage, and financial services and the rest handling investments.
The company hired its first-ever director of consumer promotion this summer, Anheuser-Busch and Sprint veteran Kevin Neff. “Consumer promotion hasn’t been a key element of our marketing mix in the past,” says chief marketing officer David Byers. “We’re putting our toe in the water this year.”
Block leaped into the pool last year with Refund Rewards, a sophisticated program that gave retail, cruise, and even new-car discounts to customers who opted to receive their tax refunds on debit cards. Cardholders got price breaks when shopping via the MasterCard-logoed debit cards, including up to $500 off a General Motors vehicle. Block gave away nearly 250,000 cards (with $500 million in total refunds) – only a fraction of the few million cards it expected to deliver.
The logistics were complicated: Block partnered with MasterCard to assure wide acceptance for the cards, and Household Finance issued them through Block’s escrow account for IRS payments.
Block this year is now reining in the technology for more traditional joint promotional efforts. With Refund Rewards, it separates promotion from debit cards to simplify discounts and reach out to more consumers. All of Block’s tax customers will get a coupon booklet filled with offers from Disney, Microsoft Corp., Linens-N-Things, Sears, Roebuck and Co., and Amazon.com. Partners not returning for another stint are General Motors, RadioShack, Fingerhut, Champs, and Northwest Airlines. Block replaced its Refund Reward Vacations program (run by travel wholesale outfit National Leisure Group) with Carlson Travel Networks to tap Carlson’s brand.
GM bowed out to redirect marketing funds, and wasn’t influenced by the changes to the program, a company spokesperson says. “There’s so much competition for our marketing dollars. We just can’t do everything,” she says.
Block expects to distribute 16 million coupon booklets this year, according to Byers. “This is much easier to execute, and we can expand it to our entire customer base.” The company handled 17 million returns last year, up from 16 million in 1999. (About 75 percent get refunds.)
Meanwhile, joint promos are running January through April to drive traffic to Block stores. A Microsoft tie-in gives customers $300 cash back when they sign up for MSN Internet service. (Past MSN partners such as Best Buy and RadioShack have tied rebates to purchases.) Financial services customers in Block stores get gift certificates at Amazon.com as a thank you.
Block targets new users through Blockbuster Video and Sprint. Direct mail to Blockbuster cardholders and, separately, to current Sprint customers offer discounts at Blockbuster (of more than $100) and Sprint when customers use Block services. The Sprint mailing alone will drop to 4.5 million prospects.
A February sweeps tie-in with ABC’s Who Wants to be a Millionaire? has Block hosting Who Wants to Be a Tax-Free Millionaire?, paying taxes for a week’s worth of winners. At the same time, Block hosts its own million-dollar sweeps for online and offline customers.
The promotions are the first work from ad agency Campbell Mithun, Minneapolis, which replaced Young & Rubicam and promo shop Impiric (then Wunderman Cato Johnson) after an early-summer agency review.
Debit cards won’t go away, though. Block is testing ways to deliver refunds via plastic. “People liked the convenience” of debit cards, Byers says. “We want to get that convenience into more markets, but not [have it] restricted to the Refund Rewards program.”
Block also is pitching a new Employer Solutions program that makes tax service an employee benefit. Companies asked Block to sweeten benefit packages in a tight job market. Some employers shoulder the cost, others split it with staffers. Block also has expanded its deal with the AFL-CIO after a tax-service-as-a-union bennie tested well with members last year.
Wherever there’s a paycheck, they’re building Block.
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