AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: ALFA LOPEZ, ASSISTANT TO THE CITY MANAGER/
ECONOMIC DEVELOPMENT MANAGER
SUBJECT:
title
PROFESSIONAL SERVICES AGREEMENT WITH BLUDOT TECHNOLOGIES, INCORPORATED (BLUDOT) FOR THE OPEN REWARDS APP AND ECONOMIC DEVELOPMENT SHOP LOCAL INCENTIVES UPDATE
summary
Summary:
As a follow up to the budget workshop, staff developed a pilot program in collaboration with the Signal Hill Chamber of Commerce (Chamber), to incentivize the community to shop local. One of the proposed initiatives is the development of a distinctive “Shop Local” year-round campaign, including a new logo to brand and promote local shopping and dining. The new logo would be included in a Shop Local collaborative campaign with the Chamber and utilized year-round to promote Signal Hill based businesses. A second component to the Shop Local program is a rewards system to incentivize residents and non-residents to shop in Signal Hill. The proposed new rewards program incentivizes local shopping by giving customers a percentage cash back every time they shop at participating stores. The proposed Shop Local programs align with the City’s Strategic Plan, which focuses on enhancing the local economy and supporting our downtown core.
Staff researched various incentive programs and proposes contracting with a company called Bludot Technologies (Bludot). Bludot has a proprietary developed app, which allows customers to access a rewards program. The app also collects key metrics that provide the City with data regarding the return on investment of the pilot program. The City’s proposed investment in the pilot program is $10,000 for Fiscal Year 2024-2025. By participating in this program, the community would contribute to the growth of our local economy, strengthen the marketing for Signal Hill based businesses, and help create a dynamic and thriving business environment.
Strategic Plan Goal(s):
Goal No. 3 Economic and Downtown Development: Improve the local economy, support local businesses, and create a vibrant downtown core.
recommendation
Recommendations:
1. Authorize the City Manager to enter into a one-year Professional Services Agreement with Bludot Technologies, for the subscription of Open Rewards, a proprietary software application, for a total not-to-exceed amount of $6,000, through June 30, 2025, in a form approved by the City Attorney.
2. Approve a one-time Local Rewards Sponsorship in the amount of $10,000. If approved, the Sponsorship amount would be held by Bludot Technologies and dispersed as reward redemptions through June 30, 2025.
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Fiscal Impact:
The City’s adopted Fiscal Year 2024-25 Operating Budget includes sufficient funds in the Economic Development Fund, line account 100-47-5400, for a shop local rewards program. Bludot Technologies Incorporated offers a proprietary monthly cost for the unique app solution at a monthly cost of $495.00 or $5,940 per year.
The second component of the program's cost is a one-time Rewards Sponsorship provided by the City. The FY 2024-25 Adopted Budget includes sufficient funds in the Economic Development Fund, line account 100-47-5400, of $10,000 for this one-time Shop Local Reward Sponsorship. If approved, the funds would Bludotsupport the rewards aspect of the program. Any unused funds at the end of the promotional period will be refunded to the City; Bludot does not charge any transaction fees.
Background:
Staff is introducing a set of new programs designed to invigorate the local economy and align with the City’s Strategic Plan economic development goals. These proposed initiatives aim to encourage both residents and non-residents to support local businesses throughout the year, further contributing to the economic vitality of our City. With programs such as a dedicated Shop Local year-round campaign, the City is focusing on strengthening ties between businesses, residents, surrounding communities with the continued support of the Chamber. These initiatives not only reflect the community’s values but also provide a direct path to achieving the goals of supporting local businesses, enhancing downtown vibrancy, and building a sustainable and resilient economy for years to come.
Measuring the success of a "Shop Local" incentive program requires tracking various metrics to assess its impact on the local economy, business participation, and community engagement. By combining quantitative data (such as sales growth and participation rates) with qualitative insights (from surveys and feedback), the City can effectively measure the success and areas for improvement. If approved, the pilot program can be evaluated through June 30, 2025, providing a comprehensive period to gather meaningful data and insights.
Analysis:
Shop Local Campaign
Inflation and rising labor costs are significantly impacting small businesses and residents, making it more important than ever to support local economies. A year-round "Shop Local" program offers numerous benefits for both the community and local businesses. By encouraging residents to consistently support neighborhood shops, the program strengthens the local economy, helps small businesses thrive, and fosters a sense of community pride. A Shop Local Campaign also boosts job creation, keeps money circulating within the City, and enhances the overall quality of life for residents by ensuring the success of local services and stores. Additionally, a year-round focus allows for sustained customer engagement, promotes long-term loyalty, and provides continuous opportunities for local businesses to grow and succeed.
Staff developed the conceptual design for Signal Hill's new "Shop Local" logo, in-house to capture the essence of our tight-knit community. Inspired by the "I Love Signal Hill" theme, the design reflects the deep roots, pride, and support that define Signal Hill (Attachment A). The logo serves as a symbol of our community's strength and collective effort to uplift our local economy, while celebrating everything that makes Signal Hill unique.
The modern pop design features a vibrant, three-dimensional heart with "Shop Local" prominently displayed across it in bold, retro-inspired script. The heart's gradient fill adds a modern twist, while the script evokes a nostalgic, vintage feel, combining contemporary style. The design is clean and focused, allowing the heart and lettering to take center stage as a powerful symbol of community pride and local support. Below are the four designs for Signal Hill's new "Shop Local" logo, each featuring a heart with the words Shop Local" across it, and slight variations that sets each one apart:
Shop Local Rewards
By partnering with Bludot Technologies, the City can help alleviate some of the financial pressure on these businesses by increasing local consumer engagement. Bludot Technologies was built in 2019 from a sixteen-week partnership with the City of Walnut Creek’s Economic Development team. Since inception, Bludot developed several proprietary economic development solutions to promote local businesses including Open Rewards, an easy-to-use app that rewards customers for shopping locally. The economic development solutions have been used by over 170 communities, across 30 states, including the cities of Indio, Lancaster, Las Vegas, and Orange.
The Open Rewards program provides a practical, tech-driven solution for boosting local spending. Bludot Technologies Incorporated offers a proprietary monthly cost for the unique app solution at a monthly cost of $495.00 or $5,940 per year (Attachment B). The app incentivizes consumers to shop at participating local businesses by offering cash-back rewards as a percentage of their total spending, which can later be redeemed for future purchases at other Signal Hill businesses. This system not only stimulates the local economy but also offers small businesses a lifeline as they navigate increasing operational costs.
A key advantage of Bludot Technology is its user-friendly design for both consumers and participating businesses, with a strong focus on supporting Signal Hill's local economy. Businesses are automatically added to the directory, requiring no extra effort on their part. For consumers, the first essential step in supporting this new economic development program is to download the Open Rewards app. By doing so, they are directly contributing to the program's success. Once the app is downloaded, consumers shop at local Signal Hill businesses and upload their receipts to the app. Without the app, purchases do not contribute to the program, making the download the first clear indicator of community support. The app reads receipts and calculates rewards based on the City's established percentage, with rewards stored in the app until redeemed through future local purchases. The program reinforces local spending while offering flexible redemption options.
Staff recommends including all Signal Hill-based restaurants, local eateries, coffee shops, bakeries/desserts, and specialty stores like juice bars and wine shops in the pilot program. This approach would encompass both franchise and non-franchise businesses, such as McDonald's and Black Bear Diner, with a higher reward percentage offered to locally owned, independent establishments. By minimizing start-up and participation costs, Open Rewards ensures that local businesses can thrive and compete, despite inflation and rising labor costs, while keeping spending within the community. This proposed structure supports both large and small businesses, reinforcing local economic growth.
Reward Sponsorship and Program Parameters
The goal of this program is to stimulate and track economic activity by encouraging residents and the broader community to support Signal Hill businesses. Staff recommends launching a cash-back incentive program during the upcoming holiday season to reward shoppers for spending locally. Consumers can earn anywhere from a pre-determined 10%-20% cash back to be utilized on future local purchases in Signal Hill. In essence, every dollar from the Rewards Sponsorship goes back into the local economy. The program's timeline could be extended through the end of the fiscal year, June 30, 2025, to provide shoppers additional time to redeem the rewards earned during the promotional period.
There are several parameters that offer complete flexibility including the sponsorship level. The Reward Sponsorship can be set at any amount, however staff recommends a pilot program start of $10,000, to fund the rewards aspect of the program. Any unspent funds at the end of the promotional period or June 30, 2025, would be refunded to the City, ensuring efficient use of funds.
Below are additional flexible reward parameters:
Reward Parameters
• Directory Listing:
o Option to only include small, non-franchised businesses only
o Option to include national chain restaurants/eateries
• One-time Promotions: specific incentives may be added to promote lunch or dinner specials
• Per-Person Maximums: a set a maximum reward amount i.e.; $100 per person
• Tiered rewards 5%-20 %
o 20% reward for Signal Hill-based non-franchised restaurants, local eateries, coffee shops, bakeries, and specialty stores like juice bars and wine shops
o 5%-10% for Signal Hill based national chain restaurants and eateries
Economic Impact
Based on data available from other participating cities, if the Reward Sponsorship is maxed out at $10,000, the total economic impact of this established reward level at a 5% reward incentive, is estimated at $200,000. This scenario depicts a total consumer spending of $200,000 through the app and 5% or $10,000 paid via rewards. The financial metric that best compares the gain or benefit from an investment relative to its cost is the return-on-investment (ROI) calculation. In the context of a "Shop Local" program, the ROI metric could be one measure of the program’s success by comparing the economic benefits generated (such as increased sales for local businesses) to the cost of implementing the program. A positive ROI indicates that the program has yielded more financial benefits than it cost to run.
There is an inverse relationship between the established reward and the ROI. The higher the reward level, the lower the ROI. The reward levels 5%-20% all yield a positive ROI. Below is an example of a week’s worth of local purchases, and the ROI at various reward levels:
Weekly Purchases Reward Level Economic ROI
$241.50 $12.08 (5%) 20x
$241.50 $24.15 (10%) 10x
$241.50 $48.30 (20%) 5x
While many aspects of a "Shop Local" program can be quantified, there are some intangible or indirect factors that are difficult to measure, such as:
1. Community Pride and Spirit: The sense of pride, connection, and support that residents feel towards their local businesses is hard to quantify, even though it plays a key role in the success of the program.
2. Word-of-Mouth Impact: While social media engagement can be tracked, the broader effects of word-of-mouth promotion, where satisfied customers encourage others to shop locally, are difficult to quantify.
3. Enhanced Business-Community Relationships: The strengthened relationships between businesses and the local community, including deeper trust and loyalty, may not be easily measurable but are crucial for long-term success.
Staff recommends measuring the success of a "Shop Local" incentive program by using the app's tracking capabilities to monitor various metrics that assess its impact on the local economy, business participation, and community engagement. If the City Council chooses to move forward with the pilot program, staff would evaluate its effectiveness based on the following programmatic goals:
Customer Participation: Measure the number of people participating in the program by tracking loyalty app downloads, and reward redemptions. The customer participation metric provides insight into community engagement and overall program reach.
Business Participation: Monitor the number of local businesses that join the program and their level of engagement. Analyze whether participation leads to increased foot traffic, sales, or customer retention for these businesses.
Customer Retention and Loyalty: Assess repeat customer behavior by reviewing how often residents return to shop at participating businesses. This measurement can be done through loyalty program data or surveys.
Survey Feedback: Conduct surveys through the app with both customers and business owners to gather qualitative data on their experiences with the program. Questions can focus on satisfaction, ease of use, and perceived benefits or areas for improvement
Redemption Rates: Track the rate at which the rewards are redeemed; high redemption rates indicate strong program engagement.
Bidding Exemption
Staff recommends the City Council approve Bludot as a sole source contract for the use of the developed economic development app “Open Rewards”, based on the company’s proprietary technology, compatibility with existing systems, and ability to meet the City’s specific economic needs. Pursuant to Section 3.20.120(J) of the Signal Hill Municipal Code, the City Council may award a sole source contract when there is only one provider capable of supplying the needed services. Bludot is the only vendor with proprietary technology designed specifically for economic development applications. The company’s solution ensures full compatibility with the City’s current systems, saving time and avoiding the costs of customization or integration challenges. Given Bludot’s unique qualifications and deep understanding of the City’s objectives, their services are in the best interest of the City.
3.20.120 Exceptions to procurement methods. (J) Sole Source. When the city council or city manager determines that there is only one source that provides the needed goods or services, or to ensure compatibility with other city products and equipment, the city shall work to procure these items in the best interest of the city.
Next Steps:
Staff recommends the City Council provide staff with further direction on the Shop Local campaign, including the proposed investment of a pilot program of $10,000 for Fiscal Year 2024-2025. The above outlined recommendations would contribute to the growth of our local economy, strengthen our business community, and support our local businesses.
Reviewed for Fiscal Impact:
_________________________
Sharon del Rosario
Attachments:
A. Shop Local Design Concepts
B. Open Rewards Proposal
C. Bludot Agreement