Service Programs Take Lead In Rewards Network Finances

While Rewards Network Inc.’s sales fell from $62.4 million during third-quarter 2008 to $52.8 million for the quarter just ended, there’s no need to fret on the company’s behalf. Its net income rose from $1.5 million to $1.9 million during the same period.

This is because the number of merchants taking advantage of its higher-margin Marketing Services Program has exceeded those participating in its Marketing Credits Program for the first time. Rewards Network, which solicits consumers to be part of a pool of diners, provides restaurant with a variety of revenue-generating services.

Under its Marketing Credits program, Rewards Networks provides restaurants with immediate capital buy advancing the restaurants money against future meals purchased by its consumer members. The Marketing Services program provides incentives to consumers to eat at participating restaurants, and provides those restaurants with transactional information and satisfaction surveys.

"The size of our net dining credits portfolio in the third quarter was essentially the same as in the second quarter," added Chris Locke, Rewards Network’s CFO, in a statement. "With a measured approach to purchasing dining credits and a strong shift towards Marketing Services, we have raised margins, lowered our risk profile, and have made the business significantly less capital intensive."

The net dining credits portfolio was $55.1 million as of the end of the third quarter on Sept. 30, compared to $82.4 million a year earlier.

Rewards Network’s marketing efforts include e-mail messages, as well as Web sites and mobile applications.