Industry News | July 7, 2010

While on Facebook, Send a Cold Stone Gift

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Cold Stone Creamery launched a social media application that allows customers to send a Cold Stone Creamery gift to their friends and family via Facebook or e-mail. The Cold Stone Creamery eGift program is an innovative part of Cold Stone Creamery’s executive team’s initiative to increase in-store AUVs and drive franchisee profitability.

“Social media is becoming increasingly pervasive and perpetuating a question of how to link a company’s social media presence with real-world sales and profitability,” says Dan Beem, president of Cold Stone Creamery. “We saw an opportunity to engage Cold Stone’s loyal customer base and social media following to drive a measurable impact on in-store sales. Our strategy for profitability continues to include innovation across the entire brand, whether that’s a creative new ice cream product or a cutting-edge social media solution.”

According to research firm Inside Network Inc., the U.S. market for virtual goods is estimated at $1.6 billion. Social networking sites account for approximately half the total market for virtual goods—twice as much as one year ago.

Unlike traditional virtual gifting, Cold Stone’s eGift application allows users to send a code for a tangible gift to any recipient’s Facebook or e-mail, instantly redeemable in any of Cold Stone’s 1,300 locations nationwide. The application, developed by e-commerce and payment processing industry provider First Data Corporation, facilitates an intuitive and secure transaction process through First Data’s proprietary technology.

Cold Stone is among the first brands leveraging this trend, linking its social media presence with concrete consumer behavior to increase profitability.

“By addressing the limits of other competitive offerings and leveraging the equity of a much-loved, well-known brand such as Cold Stone, we’re making it easier for individuals to connect and make their social media interactions more relevant in the concrete world,” Beem says.

The launch is part of Cold Stone Creamery’s strategy to drive unit-level sales and increase franchisee profitability. In addition to Cold Stone’s eGift program, the company recently rolled out its calendar of new product innovation to drive unit-level traffic and sales. The company also announced continued strategic partnerships and successful results of its cobranding initiatives with Tim Hortons and Rocky Mountain Chocolate Factory.

Comments

Why is Cold Stone so focused on social networking when it seems their entire franchise system is about to collapse. Given their longstanding issues related to their unprofitable franchisees under their current failed business model, I would think franchisee profitability and abandoning their kickback scheme would be their first priority. This was reported nationally by the Wall Street Journal in 2008 and most recently, CNBC revealed in their documentary Behind the Counter: The Untold Story of Franchising that Kahala (the companys owner) took more than $13 million in kickbacks in 2009. That was followed by some very messy legal jostling by Cold Stones attorney Robert Zarco.Shouldnt Cold Stone first focus on their franchisee profitability issues under their current business model and stop taking kickbacks? The company was founded in the 1980s. Shouldnt they have figured this out by now? Kahala needs to demonstrate they have a proven ice cream business model for Cold Stone take on projects like this. Maybe its just that they dont care that these franchisees are going bankrupt and losing their homes so long as they are making big profits. Can you say CORPORATE GREED?

Cold Stone was the pioneer of many inovations, the one they were, and are still good at is representing a failed business model. The American people are now savy to this and Cold Stone's success ( or lack there of) is reflective of it.

Cold Stone Creamery can't seem to make up its mind as to what it wants to be when it grows up. And with each bad decision followed by a worse one, more franchisees feel the pain and fall by the wayside. When I owned my franchise, I couldn't keep up (financially) with the changes being forced on me and my wife and don't see how some of my friends are staying afloat. They seemed to just grab at something that was already done and decide that it would be the trunaround savior while decrying the need for a savior as things simply sank further into the deep. You can't make any business model work if the ground rules keep changing and that's what's happening here. Rather than admit they have a screwed up system and fixing it, they continue to pile more "great ideas" onto the frianchisees. It just doesn't work.

I had multiple stores ( hate to admit too) every couple of months I would get calls from First Data telling me through phone calls and emails that I needed updates to a system that they created and they collected their money through. These updates costs any where between 250- 375 dollars per store. I could never understand how I could be "out of compliance" so much when they created the program and I had to keep signing up and paying for up grades or I was threaten to be out of compliance and the proper authorities would introduce fines of amounts I could not afford to pay. I also own another business that also used a POS system and I never in 4 years got phone calls or emails requiring me to update my credit card system for a fee. I came to the conclusion that this was a "SCAM" between First Data and Kahala. Also, First Data has one of the highest credit card fees that franchisee are locked into and can not get out. They come up with this "hostage" scam of upgrades that should be given for free--if these upgrades exist at all! I can only imagine how much this cost the franchisee's to sign up for. Don't think for a minute that this was done for free. And I am sure that there was a kickback to Kahala for their infinite wisdom of a poor idea.

Can't wait to Corporate that's sending out "credited" gift cards through the social media websites to "drive more traffic" to stores. The one thing they won't tell the franchisee is that they (the franchisee) will be responsible for picking up a portion of the credit and, overall, taking a loss. Corporate will then use the excuse, "well, we drove traffic to your stores and you didn't up-sell." And the vicious cycle continues...

Can't wait to Corporate that's sending out "credited" gift cards through the social media websites to "drive more traffic" to stores. The one thing they won't tell the franchisee is that they (the franchisee) will be responsible for picking up a portion of the credit and, overall, taking a loss. Corporate will then use the excuse, "well, we drove traffic to your stores and you didn't up-sell." And the vicious cycle continues...

How is this marketing different than other e-mail blasts of coupons, birthday club, etc that Cold Stone has already tried. Seems like another gimmick that Cold Stone is trying. Seems like the franchisees are the ones who are always at the expense of the marketing ideas. They have to give to try and drive sales. However, many customers do not return because of the high prices of the products ( i.e. ice cream cakes, smoothies and shake ).We had a co-op that hired 2 marketing representatives for our area. They both were unable to drive sales into our stores. They came up with concepts that seemed good, however, they failed to generate sales in the stores in our co-op area. Marketing dollars that were wasted.

How is this marketing different than other e-mail blasts of coupons, birthday club, etc that Cold Stone has already tried. Seems like another gimmick that Cold Stone is trying. Seems like the franchisees are the ones who are always at the expense of the marketing ideas. They have to give to try and drive sales. However, many customers do not return because of the high prices of the products ( i.e. ice cream cakes, smoothies and shake ).We had a co-op that hired 2 marketing representatives for our area. They both were unable to drive sales into our stores. They came up with concepts that seemed good, however, they failed to generate sales in the stores in our co-op area. Marketing dollars that were wasted.

All I can say fellow Coldstone/Kahala franchisee's is fight them on this. This will not work in your favor. It will only allow another couple of million dollars in kickbacks, and youre going to be responsible at the end.I only hope and pray these lowlife heartless people who are getting richer by the week are stopped in their shoes from knocking out another family into losing their homes, Divorce, bankruptcy, and other crises in life that is totally unnecessary. My partner and I where retired very successful business people. We did our dediligents and Performa as any good business person would do. What we did not know we were going to encounter is the lies and disseat that was put upon us after the first 6 months in business. All we ever received from Kahala/Coldstone was heartache, threatening letters from their legal why we could not close our store even though we were not turning a profit. Their answer was always, "You need to do more marketing". At the same time EVERY new flavor, new idea that they came up with was more money out of our pockets, and would FAIL! I'm sure every ex-franchisee and existing franchisee knows what I am talking about. I could go on, and on. The bottom line fellow franchisees "Get out NOW while you still have your shirts!" I thank God for Cecil Rolle who helped steer us out of the storm. Please, if you are one of the many franchiseess who are intimidated and scared that there was no other door to open, get in touch with Cecil. I promise you will not prevail in this franchisee. Its business model is set up to FAIL. God help the ones who feel they can make it this business model work. I will take my hat off to you if you can turn a profit, and I don't mean making enough to get by. Your much better off working for a company that pays ,benefits, job security, and no personal responsibilities for you and your family.

Just what franchisees need, another free give-away. With all the freebies we gave away, it did not increase business or build loyal customers. The marketing helps Kahala/Cold Stone but kills potential profits of the franchisees. With the kick backs they receive they just want theirs regardless of what franchisees are losing. They are closing stores by the droves. All I can do is shake my head in disbelief and wonder will Kahala and Dan Beem at Cold Stone ever see the light?

Just what franchisees need, another free give-away. With all the freebies we gave away, it did not increase business or build loyal customers. The marketing helps Kahala/Cold Stone but kills potential profits of the franchisees. With the kick backs they receive they just want theirs regardless of what franchisees are losing. They are closing stores by the droves. All I can do is shake my head in disbelief and wonder will Kahala and Dan Beem at Cold Stone ever see the light?

Just what franchisees need, another free give-away. With all the freebies we gave away, it did not increase business or build loyal customers. The marketing helps Kahala/Cold Stone but kills potential profits of the franchisees. With the kick backs they receive they just want theirs regardless of what franchisees are losing. They are closing stores by the droves. All I can do is shake my head in disbelief and wonder will Kahala and Dan Beem at Cold Stone ever see the light?

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