A startup company is trying to entice Long Island consumers to shop locally in exchange for discounts.
Under Long Island Loyalty's program participating stores offer 10 percent discounts to members; the discounts come in the form of rebates that can be used for future purchases at any participating business.
Company officials said the discount gives consumers a concrete reason to shop local. While most consumers say supporting local small businesses is important, many also believe they'll pay lower prices at chain and big-box stores.
Moms group got inspired
Long Island Loyalty was born after the founders of the Massapequa Moms Group, a Facebook group that offered help to residents in the wake of superstorm Sandy, learned that its members were requesting discounts from local business owners.
"We thought, wouldn't it be nice if we could do something for the group as a whole?" said Dawn Boyle Kostakis, 43, a co-founder of Long Island Loyalty.
That's when Kostakis, along with Denise Bianco, Stephanie Hartman and Kerri Romeo, all from Massapequa, came up with the idea to create a membership card for the group, which eventually spawned the Islandwide loyalty program.
In May 2013 they partnered with Greg Goldfeder, a south Amityville resident who has 12 years' experience in credit card and noncash payment processing, to create the company.
Like most new business owners, the partners said they've hit some minor bumps in the road that have required tweaks to their original vision.
"We tweaked the idea probably 30 times," said Goldfeder, 37. "Keeping the money on Long Island and the community of these locally owned businesses is the goal."
First, the partners had to convince business owners to join the Long Island Loyalty network by paying a one-time sign-up fee, plus a monthly membership and transaction fees that can total about $500 a year. Potential benefits for merchants include increased store traffic and new customers from being listed in the company's online business directory. Long Island Loyalty also gives businesses window signs to advertise their participation. So far, more than 110 businesses across the Island -- out of about 250 contacted -- have signed up.
"It has been seamless," said participating merchant Valentino Zarboutis, 32, co-owner of the Massapequa Diner. "It seems to be well executed on their part. We are getting more and more people every day who are bringing their card."
About 3,000 loyalty cards are in circulation since the program launched in July. Using the card allows consumers to receive a 10 percent rebate on purchases that is then loaded back on the card for future purchases at any in-network businesses, ranging from tattoo parlors, restaurants and hair salons to florists and clothing stores. Consumers can register online to receive the card for free. The company also hosts events at local establishments to distribute cards.
"The idea is to stimulate sales with the 'free' money consumers are getting," Goldfeder said.
But Hofstra University business and marketing professor Barry Berman said the program may have some flaws. A traditional loyalty club is meant to create an allegiance between a consumer and a specific merchant to keep them coming back, he said.
"Here . . . you are allowing someone to give whatever discount you gave to someone else, and hypothetically it could be a competing merchant," Berman said.
But Hartman, 41, said Long Island Loyalty is geared to "help all local businesses." If a person likes a particular store, "they may frequent it more, gaining the 10 percent," she said, "but they may also go to a store they never knew existed" because of the discount. "When all things are equal, the participating business will get the consumer through the doors."
AT A GLANCE
COMPANY: Long Island Loyalty
FOUNDERS: Dawn Boyle Kostakis, Denise Bianco, Stephanie Hartman, Kerri Romeo and Greg Goldfeder
STARTED: July 2014
DISCOUNT CARDS: More than 3,000 in circulation
PARTICIPANTS: More than 110 businesses