July 23, 2013 Leave a Comment
If you’re looking for a program that guarantees to deliver boffo results for your product or service, you cannot ignore online rewards programs.
Loyalty programs are nothing new, whether it’s punch-cards for coffee or American Express rewards and tie-ins for purchases. Online shopping has resulted in the rapid development of a large number of rewards programs that offer incentives for continued online purchasing. Whether they’re cash back, points-based (redeemable for products or vouchers), or offer airline frequent flyer miles and hotel points, donations to charity, or even carbon offsets, they are all skyrocketing. No doubt a nerve has been touched.
(We have even found they deliver a significant boost to response in marketing a product or service to consumers. What was designed as a retention tool is actually an aid to acquisition as well.)
Rewards portals are booming in most major markets, especially in the US, Canada, UK, and Australia. While they have roots in traditional off-line, non-competitive loyalty programs, such portals often add considerably greater value to the customer than their traditional off-line equivalent, which accounts for their dramatic growth and high levels of customer acceptance.
Why are they such a success? For one, the business model is one of dumping the costs onto someone else while reaping the consumer $$. Cash back and reward-based websites use the affiliate marketing model, which is a performance-based marketing tool. These networks enable detailed tracking of which website is referring the customers, what customers buy and when. This valuable data is tracked and reconciled against the affiliate’s own user database, and then commissions are passed on to the customer—sometimes even the entire amount.
The psychology is powerful. The customer feels they are getting something back, usually at no extra cost and often with an additional discount or bonus. And again—from the safety and comfort of their bed, armchair or desk. The retailer for his part enjoys passing on the marketing costs—practically 100%—to the affiliate.
The result is an explosion in rewards malls, sites that can give shoppers extra points and cash back for purchases made at participating online retailers. These are super perks, typically, and the deals are not hard to come by, either. If you have a credit card, you are most likely eligible to join these programs and start saving money.
Next time: the top rewards malls and what both consumers and marketers can learn from them.
Direct Choice Inc. is a full-service direct marketing agency that has worked with national and regional brands in a wide variety of vertical markets. In addition to this blog, you can also find us on Facebook, Twitter, and LinkedIn