CBORD Explains: Why Adding Off-Campus Merchants Increases Spending On-Campus
It's a common concern, and it is usually voiced along these lines: If we add additional locations where our students can spend their discretionary accounts/meal plans, we will see less spending on-campus. Time and again we've heard this, but what we've actually seen is the opposite. Every time. To explain this, we often refer to the "rising tide lifts all boats" metaphor, and in this case, that metaphor rings true.
Each university has its own reasons for valuing patron spending through the card system (closed loop). For some it is about the student experience: creating convenience outside of the classroom as a way to impact student success. For others it's about cold hard cash: the more closed loop transactions are processed on campus, the less credit and debit card fees their operation has to pay. (Go ahead, do the math. We bet you're spending around 6% when you consider all costs). Whatever the reason, you have found that adding as many locations as possible where that ID card can be used to pay (bookstore, laundry, vending, parking, retail, sporting events, library, etc.), the more likely students are to deposit funds into the account. You've made it convenient, your students have a taste for it, and now their ID cards are the way they choose to pay.
Take it a step further by adding pizza delivery and you have given your patrons another compelling reason to use the ID card to pay—and this is important—for something they were already going to pay for anyway. Only now you are continuing to support your original goals, with the bonus that you'll be earning revenue on that transaction.
The value of your entire program grows with each additional location a student can use the ID. So add a coffee shop, a wing place, a gas station, a convenience store, a pharmacy, and you'll start to see the opposite of the initial fear: you will now see spending increase on campus.
We asked our longtime customer Becky Hinkle, Director of Business Operations at James Madison University, what happened at JMU, and here is what she had to say:
"Our dining provider definitely had concerns when we first made plans to add off-campus locations to the JACard, so from day one we closely monitored the program looking for any negative impact. From the very start we saw spending increase on campus—a trend that continues to this day, 15 years later."
Fifteen years of data is pretty compelling!
Here is one caveat—don't put the cart before the horse. Build a solid on-campus program before you add off-campus locations. Building the value on-campus will be the factor that drives students to deposit into the account. In the imagined "war" between on and off-campus spending, on-campus always wins.
We haven't even touched on the amazing and innovative ways some universities are now using meal plans at off-campus locations. Check out our interview with Steve Mello at the University of Rhode Island for an inside look at a campus that has leveraged the addition of off-campus locations to the meal plan to drive spending on-campus to tremendous success.