These days, loyalty and incentive sites form one of the two pillars of most affiliate networks top tier publisher base, the other pillar of course being search. With today’s importance of loyalty in the publisher mix, it is sometimes surprising to think back to how recently the sector has emerged and gained in importance.
Broadly speaking the sites I’m going to be discussing here breakdown into two separate categories. Both offer users incentives to continue buying through the site, one type will offer said users a percentage of the purchase price back in the form of cash, the other in terms of points that can later be exchanged for products or services.
In the UK leading examples of cashback sites include Quidco and Top cashback, whilst with loyalty you have Nectar estores and iPoints. There are of course many more, with new entrants to the market appearing regularly.
Despite today’s prominence, loyalty sites weren’t and sometimes still aren’t always flavour of the month. Merchant’s can be rightly resistant to working with them, as with search affiliates who they feel could be taking up their brand space, loyalty affiliates by what is effectively offering a discount can be seen to be undercutting their own online sales channels.
When I first started working in affiliate marketing there was a definite resistance to working with any form of loyalty site. Not only because of some merchant’s misgivings, but also through the amount of process required to make loyalty use effective.
Unfortunately no tracking mechanism is 100% effective, though many affiliate networks do have excellent tracking, cookie blockers and overwrites, broken user journey etc all contribute to the problem of untracked sales. In performance marketing there are always going to be issues with transactions going untracked, where the publisher’s business model is dependent on users being rewarded for every purchase however you can see how this would be a problem.
Never the less despite the initial lack of enthusiam from some, loyalty and incentive sites have been the affiliate success story over recent years. It is easy to understand why, shoppers do like getting something back, whether it’s a deposit in their bank account or a free trip to Alton Towers.
The success of these sites has not gone unnoticed. In the US MSN shopping, now of course Bing shopping offers a range of cashback stores for the happy consumer to choose from.
In the UK the level of user retention for the leading sites appears to be growing, with many potential purchasers using the sites as their first choice shopping portal. There has also been diversification with sites offering loyalty benefits in terms of carbon credits or one of my own favourites Kidstart, giving giving not cashback but investing the money in a child’s trust fund.
With the economic outlook remaining uncertain, it would appear to be a great time for loyalty. Myself however I feel that this could be a time which exposes some of the weaknesses of the model.
Restive merchants who currently use loyalty channels could again reconsider due to the appearance of discounts. Users might become keener on discounts today, through emerging voucher code sites rather than the promise of jam tomorrow or a month’s free health club membership.
Despite these problems, I still feel that the loyalty model will continue to be attractive. I do feel though that we shall see consolidation in the sector with larger sites becoming more dominant.
Anyway that’s just my prediction, and events have a way of surprising us.
Rob
MD one