Company uses customer loyalty to support nonprofits

"It's a high discount, but I think it evens out," Bennett said.

But Bobbi Fuhr, general manager of a Perkins Restaurant & Bakery, said she's simply not sure whether SmartTown is paying off. She said ACI's recent decision to hire someone locally within each SmartTown community to manage and promote the program will help.

"I've seen the potential of what it could do, but we haven't scraped the surface yet," Fuhr said.

While there's very little to show that such programs increase loyalty, the charity aspect of the SmartTown program could persuade consumers to splurge a little more on something like dinner in a restaurant if they know part of it is going to a good cause, said Ravi Dahr, director of the Center for Customer Insights at Yale University.

"Anything that can reduce the guilt helps," he said. "Consumers aren't consciously aware of this, but we've found that it works."

Deb Herlick uses her SmartTown card to buy gas at the only New Ulm station in the program. She directs the charitable contribution to the Lutheran high school in town; her 18-year-old daughter, Shelby, has hers go toward breast cancer research.

"I think people who don't normally donate to a cause will do this, because they won't see the money leave their pockets," Herlick said.

Bouchey and Michael Wheelock, ACI's executive vice president, said they hope the company can become profitable by building volume with the infrastructure already in place. ACI is rolling out a variation of the card program, called Cash Value, for larger markets. It hopes some bigger retailers will sign on to help expand the program nationwide -but is taking care to make sure the two programs complement each other, Bouchey said.

For the stores, technology has made most loyalty programs relatively inexpensive, said George John, a marketing professor at the University of Minnesota. And businesses may find they have more to lose by not having one, he said.

"It's hard to make these things work, but you're kind of trapped because you have to do it to stay competitive," John said.