Online shopping rewards
Encyclopedia
Online shopping rewards portals are a relatively new type of loyalty program
.
The advent of online shopping has resulted in the rapid development of a large number of rewards programs that offer incentives for shopping. These programmes may be points-based (redeemable for products or vouchers), cashback, airline frequent flyer-miles
-based, hotel points, donations to charity, or even carbon offsets.
These programmes are often presented to the consumer as coalitions of large numbers of retailers, but are probably better described as competitive loyalty programmes, to differentiate them from their precursors the original single retailer non-competitive loyalty program
.
s, 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.
, which is a performance based marketing tool. Affiliate marketing
networks make it possible to track in detail where users come from (which website is referring the customers), what users buy (down to the product) and when. Rewards based websites track and reconcile this information with their own user database, and pass on a proportion or even all of the commission received to the customer. From the customer's perspective they are getting something back, usually at no extra cost and often with an additional discount or bonus. From the retailer's perspective, the role and costs of marketing are passed on almost entirely to the affiliate. While hundreds of thousands of websites can easily use affiliate programmes to advertise products and retailers (from sports blogs, fanzines through to almost any niche website), cash back and rewards based programmes are much fewer in number, because of the need to track, store and retrieve individual customer information with a high degree of precision.
s. Online shopping programs of the sort described here tend to be consumer oriented points based or cash back programs. Traditional programs focus their proposition on extrinsic rewards {see also Extrinsic motivation}: cash back or a choice of attractive rewards. A variant, though not unique to online shopping programs, is the intrinsic reward. Cause related
websites, much like affinity credit cards
give their users the opportunity to donate the cash back / points to a charity, or to a school or to a club. Others still give their users a range of options. With consumer concern about climate change growing, a number of green rewards shopping portals have recently appeared. Instead of cash back or points
these websites offer carbon credit
s (also known as carbon offset
s) or green gadgets to encourage consumers to shop with particular retailers or make changes to their lifestyle.
Most reward websites retain a proportion of the commission, and only industry insiders are aware of the nuances of the business model used and therefore the customer benefit.
From the consumer's perspective it may not always be clear whether the benefit going to the supported cause is the most effective way of raising funds. For example, in some countries like the UK, a significant tax benefit can be provided to the charity by donating in cash.
While the majority of green reward websites also offer some useful information and advice on greener living, few of them seem to encourage more sustainable consumption
.
Loyalty program
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....
.
The advent of online shopping has resulted in the rapid development of a large number of rewards programs that offer incentives for shopping. These programmes may be points-based (redeemable for products or vouchers), cashback, airline frequent flyer-miles
Frequent flyer program
A frequent flyer program is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles...
-based, hotel points, donations to charity, or even carbon offsets.
These programmes are often presented to the consumer as coalitions of large numbers of retailers, but are probably better described as competitive loyalty programmes, to differentiate them from their precursors the original single retailer non-competitive loyalty program
Loyalty program
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....
.
History
Rewards portals have grown very rapidly in most major markets, especially in the US, Canada, UK, and Australia. While they have roots in traditional off-line non-competitive loyalty programLoyalty program
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....
s, 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.
The Marketing Model
Cash back and reward based websites operate using a marketing model known as affiliate marketingAffiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
, which is a performance based marketing tool. Affiliate marketing
Affiliate marketing
Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
networks make it possible to track in detail where users come from (which website is referring the customers), what users buy (down to the product) and when. Rewards based websites track and reconcile this information with their own user database, and pass on a proportion or even all of the commission received to the customer. From the customer's perspective they are getting something back, usually at no extra cost and often with an additional discount or bonus. From the retailer's perspective, the role and costs of marketing are passed on almost entirely to the affiliate. While hundreds of thousands of websites can easily use affiliate programmes to advertise products and retailers (from sports blogs, fanzines through to almost any niche website), cash back and rewards based programmes are much fewer in number, because of the need to track, store and retrieve individual customer information with a high degree of precision.
A Typology
A related article describes a typology of incentive programIncentive program
An incentive program is a formal scheme used to promote or encourage specific actions or behavior by a specific group of people during a defined period of time. Incentive programs are particularly used in business management to motivate employees, and in sales to attract and retain customers...
s. Online shopping programs of the sort described here tend to be consumer oriented points based or cash back programs. Traditional programs focus their proposition on extrinsic rewards {see also Extrinsic motivation}: cash back or a choice of attractive rewards. A variant, though not unique to online shopping programs, is the intrinsic reward. Cause related
Cause marketing
Cause marketing or cause-related marketing refers to a type of marketing involving the cooperative efforts of a "for profit" business and a non-profit organization for mutual benefit. The term is sometimes used more broadly and generally to refer to any type of marketing effort for social and...
websites, much like affinity credit cards
Affinity credit card scheme
An affinity credit card program allows an organization to offer its members and supporters—those who have an "affinity" for that organization—a credit card that promotes the organization's brand and imagery each time a cardholder uses the card...
give their users the opportunity to donate the cash back / points to a charity, or to a school or to a club. Others still give their users a range of options. With consumer concern about climate change growing, a number of green rewards shopping portals have recently appeared. Instead of cash back or points
Loyalty program
Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....
these websites offer carbon credit
Carbon credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....
s (also known as carbon offset
Carbon offset
A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere....
s) or green gadgets to encourage consumers to shop with particular retailers or make changes to their lifestyle.
Criticisms
Points based web sites may have different currencies, which makes it difficult to compare the customer benefit.Most reward websites retain a proportion of the commission, and only industry insiders are aware of the nuances of the business model used and therefore the customer benefit.
From the consumer's perspective it may not always be clear whether the benefit going to the supported cause is the most effective way of raising funds. For example, in some countries like the UK, a significant tax benefit can be provided to the charity by donating in cash.
While the majority of green reward websites also offer some useful information and advice on greener living, few of them seem to encourage more sustainable consumption
Sustainable consumption
Main articles: Sustainability, Sustainable livingDefinitions of sustainable consumption share a number of common features, and to an extent build in the characteristics of sustainable production, its twin sister concept and inherit much of from the idea of sustainable development:* Quality of...
.
See also
- Affiliate marketingAffiliate marketingAffiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate's own marketing efforts...
- Loyalty programLoyalty programLoyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm....
- Sales promotionSales promotionSales promotion is one of the four aspects of promotional mix. Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability...
- Frequent flyer programFrequent flyer programA frequent flyer program is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent flyer miles corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles...