It was ten years ago, on October 19, 2001, that CompareRewards.com went live.
Things were a little different then.
By 2011, only around 30% of US households use a dial-up internet connection, with 70% connecting by broadband. AOL subscribers have dropped to 3 million. And with the introduction of the first BlackBerry smartphone in 2003, and the iPhone in 2007, now 42% of Americans own a smartphone with internet capabilities.
In the last ten years, how we connect to the internet has changed. Substantially.
When I first started CompareRewards, rewards programs were more about rewarding consumers for visiting websites or playing games because e-commerce hadn’t yet taken hold. Most people didn’t shop online. These days, rewards are primarily for one of two things: shopping online and taking surveys.
And where survey programs used to be completely different entities from cash back programs, these days it’s fairly common to see them integrated, with or without an “offer wall.” Being rewarded just for visiting a website is rare.
The ghosts of Rewards Programs Past echo through the pages of CompareRewards.com: Blink, Trocamania, Milesource, AllThingsRewarded, DisneyAwards, PrimaRewards, NetFlip, Jellyfish… and many others have come and gone in 10 years.
Some big names have tried their hand at creating a successful rewards program and were met with failure: Microsoft through Bing Cashback, CBS through Sportsline.com, Publishers Clearinghouse through PCHPoints, Parade Magazine through ParadePerks. Banks tried debit card reward programs but legislation passed making debit card use more expensive, and those have gone by the wayside. And in my 10 years of reporting on rewards programs here, even long-time offline programs Betty Crocker Points and Kool-Aid Points have been discontinued.
Over the years, we’ve earned Trocas, Bitcards, Awardmiles, Grab-a-Cabs, and tokens, along with good old points and cash. So often, rewards programs used the points system to help hide what they were really offering members. That was one of the main reasons I started this site.
But enough about the past: What can we expect over the next 10 years?
1. We’re going to continue to see the development of free, non credit-card based store loyalty programs. Sears/Kmart, JCPenney, Best Buy, ToysRUs/BabiesRUs, Barnes and Noble, Hallmark, CVS… all of these retailers and others offer their members perks like exclusive coupons or free products with purchase, in exchange for giving the retailer some very valuable information: What type og promotion motivates you to shop? Which brands do you prefer? Do you buy for children? Who are their big spenders and who are the frugalistas? By analyzing purchase data they can target offers to different customer segments, always encouraging them to come back for more. By making their rewards programs truly free, and not just for credit card users, they’re able to capture data from cash, check, and debit card shoppers as well.
2. There will be more consolidation in online rewards programs. The cashback market is a very difficult one for new companies to break into, because “the big guys” have reached the critical mass required to negotiate higher commission rates. Further, with a huge membership base that has provided segmenting demographics (age, sex, income, marital status, kids, interests), the larger programs can sell targeted ads for additional income.
This past year has seen the sale or merger of several large rewards programs. In July, Memolink was sold to the Matomy Media Group, a multinational marketing firm. In September, Ebates bought FatWallet, bringing together two big players under one corporate umbrella, although they continue to operate separately…for now. This purchase was just four months after Ebates bought Cashbaq, a rewards program that had closed three months prior, blaming the recession.
We’re going to see more consolidation in the industry and fewer new companies entering the fray. New member acquisition isn’t cheap (probably a driving factor between the recent mergers), and smaller companies lack the competitive advantage of the entrenched veterans. Plus, until the US economy rebounds, the sales volume isn’t there to justify the overhead of entering the market.
3. Like it or not, internet sales tax is coming. States are missing out on a substantial amount of revenue from shoppers choosing to buy from Amazon, Overstock, and other internet-only retailers. Yes, consumers are required to report their online shopping activities to their respective states and pay sales tax on them. However, the honor system simply does not work. Some states have started requiring sales tax to be submitted by companies selling to residents of their state if the website that generated the sale is located in the state. Yes, the logic is convoluted, but when every state enacts this legislation, every online store will end up having to charge you sales tax. It’s coming. Be ready.
4. The new rewards frontier is mobile. Currently, only a quarter of all smartphone users have made a purchase with their phones, which shows a huge potential for growth.
Imagine a world where a rewards program stores your home address and preferred credit card on file, and provides a price comparison app, similar to those already available, where a shopper can take a picture of a barcode and get comparative prices. Joe Customer hits the mall, finds something he’s ready to buy, uses the app and finds out he can get this product elsewhere for $x shipped plus get cashback, and with a click of a button, it’s ordered to his default credit card, to his home address.
Or, suppose Joe Customer’s walking the aisles at Sears, Lowes, Office Depot, or Best Buy, all stores that commission on store-pickup orders, and he decides he wants to buy this chainsaw, that desk, or that LCD TV. He takes a pic of the barcode, selects the store, clicks “Buy”, and the item’s waiting for him at package pickup in 15 minutes or less. And he’s earned cashback.
The technology already exists to embed an online affiliate’s tracking code into a mobile coupon, making it possible for commissions (cashback) to be earned when a shopper uses his smartphone to buy a specific product in-store. If this can be done on a product-by-product basis, why not have one “coupon” (basically a cashback tracker) for all purchases at a cashback-affiliated merchant? Simply show your phone and have the cashier scan it when you check out. Boom, you’ve earned cashback in-store!
As our smartphones become smarter, faster, and more affordable, we will see more shopping done either on the mobile platforms themselves or using coupons or price comparisons on the devices. Rewards programs can and will adapt.
5. Neuromarketing is now sci-fi without the “fi.” New technology, provided by companies like EmSense, allows consumer survey sites to reward members for not just answering marketing questions, but doing so in a way that measures their body’s reactions to their surveys. Simply don a special headband that identifies you using biometrics, and it will analyze your emotional reactions to an ad, a video, or a TV program, using an accelerometer to detect distractions… and you can earn up to $40 a survey.
I have received my EmSense headset but have not yet used it. I’m not certain that the promise of higher rewards per survey justify having my body’s physical reactions measured and sent back to some marketing company for analysis. But then again, 10 years ago I was hesitant to use my credit card to make a purchase online. Things change once we get used to the idea and are reassured of the safeguards.
As technology advances and becomes more affordable (I can only imagine how much my EmSense headset would have cost 5 years ago), we will see more opportunities like this — for both marketers and consumers.
So, here’s to the next ten years. Thank you for supporting my efforts over the years to put a real value on points so we could all compare apples to apples. Thank you for joining programs with my recommendation and for not blaming me personally when they sometimes went under. Thank you for sharing my passion of online rewards programs in all forms, online and off. Thank you for reading my posts and submitting your tips. I hope you’ll join me on November 12th at 6pm for my annual chat. More details on that will be forthcoming.
And now, for fun, here is a look back at some of my favorite rewards programs and yours:
Beenz: 2000 and the end (2001)
Blink: 2001 and the end (2003)
Boomertowne: 2007 (no farewell post)
Cashbaq: 2005 and the end (2011)
Ebates: 2001 and still going strong
Fatshoe: 2001 and the end (2003)
Freeride: 2000 (no farewell post), version 2 in 2002 and the end in 2002, version 3 in 2003 and still going
Jellyfish.com: 2006 and the end (2009)
Kool-Aid Points: 2001 and the end (2010)
Memolink: 2001 and still going strong
Milesource: 2000 and the end (2007)
MrRebates: 2004 and still going strong
MyPoints: 2001 and still going strong
NetWinner: 2006 (no farewell post)
PointPool: 2002 (no farewell post)
QuickRewards.net: 2002 and still going strong
SearchCactus: 2000 (no farewell post)
SearchChips: 2004 and the end (2007)
Upromise: 2001 and still going strong