Ebates Founder Talks About Loyalty

February 3, 2006 · 0 comments

I just got around to reading a January 18th article written by Ebates founder and CEO, Alessandro Isolani in iMedia Connection called “The Art of Woo.” No, it’s not about action movie director John Woo (though I have a feeling that would have been a more interesting read), it’s about maintaining customer loyalty.
Interesting stats shared in the article: Ebates has 7 million members but only “roughly 1 million” are active shoppers. They have 800 merchant partners. Their “close rate” in October (the percentage of people who start shopping at Ebates and actually follow through to make a purchase) was over 10%, compared to an industry average of 4%. (Retail in general, or rewards program industry? Unclear.) And 90% of members making 5 purchases through Ebates will eventually make a 6th. (No huge surprise there — if you like a program you will continue to use it; I imagine all rewards programs could boast a similar statistic.)
Alessandro defended the use of cashback portals like Ebates by merchants, saying basically, “Yeah, people may have made a purchase directly through your site anyway, but we do still drive some new visitors to your site, plus, if you don’t participate as an Ebates merchant, I bet your competitors will.” Kinda lame logic; what if all their merchants pulled out? And the big guys like B&N and FTD surely don’t need Ebates as a key to their success, especially since Ebates takes a cut of every sale made through their portal. People will shop through those big sites anyway.
And along that train of thought, I’m going to digress into a little commentary here. I predict that at some point in the perhaps not-so-distant future, many if not all of the “big guys”, the huge retailers, will pull out of shopping portals like Ebates. They will find alternate online advertising methods to maintain top-of-mind awareness for their brands that will NOT require them to pay a cut of their sales to some rebate portal. And all the shopping portals (the rewards programs) are going to be left with are the young turks, the smaller and newer companies that really NEED the marketing and promotion that the portals can offer.
My prediction.

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