Are Rewards Programs Worth It?

April 15, 2007 · 0 comments

That’s the basic question behind today’s Los Angeles Times article, “Rewarded For the Exchange.”
The author comments on the long waiting times for shopping rebates (using Ebates as an example), the “not major” rewards you’ll earn “if you’re not on a shopping spree,” and privacy concerns (using MyPoints’ ambiguous privacy policy as an example).
He says that, “…even the biggest rewards programs have not caught on in a major way,” citing March internet traffic statistics for Ebates and MyPoints (one and four million, respectively) and comparing that to 42 million site visits at Amazon.com in March.
An e-commerce analyst is quoted as suggesting that rewards programs aren’t popular because they add an extra step to the shopping process . “Is it worth the trouble to get 2% or 3% back?”
I think the article is interesting, although it clearly is biased against rewards programs and I think the author is somewhat uninformed.
Long Waiting Times? Not Always
The length of time it takes to receive your rebate depends on the particular rewards program. Yes, Ebates pays quarterly. Any purchases you make between now and the end of June will be paid in mid-August. If you don’t want to wait that long, you could shop through MyPoints and only wait about 30 days (though those of us who know rewards programs avoid MyPoints because they offer some of the lowest shopping rebates when you convert points to percentage rebates). Other websites will pay your rebate even quicker — CreationsRewards pays within a week of reaching their payout minimum of $5 (1,000 points), and QuickRewards typically pays you within a day or two of your placing a shopping order (with NO minimum to get paid if you choose PayPal as an option).
Not Major Rewards? Define “Major.”
First of all, earning a free toaster (the author’s example) really isn’t hard. For example: Mother’s Day is coming up. I’m ordering two $50 arrangements (for his mom and mine), and that $100 at FTD will earn me 12%, or $12 cash back. I have to order a new inkjet cartridge for my printer. At 1-Inkjet, I’ll earn 25% on my $36 order…$9 cash back. My son’s subscription to Nick Jr. Magazine just ran out. It’s $20 at ValueMags, and my 25% back is another $5 into my account. And my cats just ran out of Advantage flea treatment, and I’ll earn 6% cash back at Petco on my $40 purchase, another $2+.
Maybe to folks from Los Angeles, where they have an astronomical cost of living, earning $28 cash back from four routine purchases you were going to make anyway isn’t much money. But to me, a typical middle-income housewife, that’s a decent chunk of change…VERY much worth the extra clicks to go through a rewards program first.
And to most regular folks, $28 is plenty of money to get a perfectly nice toaster. The Black & Decker Toast-It-All Plus (with electronic controls, defrost function, and a removable crumb tray) is $22.99 at AceHardware.com, plus I’ll earn 5% cash back there! Or, hmm, maybe I’d choose the Black & Decker Toaster Oven at Sears, on sale for $19.99 plus 2% cash back. Boscovs.com has a really cool-looking T-Fal toaster for $19.99 (3% cash back). Gee whiz. Decisions, decisions.
Privacy Concerns? Doesn’t Concern Me.
Let’s look at the information rewards programs may keep on you (every program has their own set of data points they keep on their members, some have more than others). Your name and address? Necessary to cut you a check. Your age, household income range, gender, number of kids, hobbies and interests? Used to attract advertisers and to target ads.
First of all, smart rewards program members know to fudge on these questions in order to receive the greatest number of paid emails. I could give a rat’s behind about golf, but I have it checked off as an interest just in case MyPoints sends out a 4c email to golfers. When my friends ask why they’re not getting as many paid emails as I do, I suggest they fudge on their income (people with household incomes under $20k will be less attractive, thus get fewer paid emails, than someone who makes, say, $75k).
Second of all, I always suggest that people use a spam-friendly email address for rewards programs — one they don’t mind possibly getting cluttered with spam. YahooMail does a fairly decent job of filtering out spam.
Lastly, I only give out my cellphone number when I sign up to a rewards program or complete offers there. It has caller ID and I ignore unknown numbers, and I shut it off at night.
These things all minimize any potential nuisances from spam… but they are really just precautions. Since the CAN-SPAM Act, I haven’t had problems with any of the rewards programs I do spamming me. You can opt in to receive their emails (which you’re usually paid to read, or at least directed to offers that you’ll be paid to complete), or you can choose to receive no emails at all from the rewards program. It’s entirely up to you.
As for those who worry about Big Brother or some non-governmental entity tracking all sorts of data on you and keeping it in a scary super-secret database somewhere…remember, all “they” know about you is that you “earn over $75,000 and like golf.” They “know” whatever you tell them. Just make sure your mailing address is accurate. :)
Rewards Programs Haven’t Caught On?
There are several flaws in the logic of comparing Ebates and MyPoints to Amazon simply on the basis of site visitors and to conclude that rewards sites are just a blip on the radar screen.
First of all, you can’t subtract out members of Ebates and MyPoints from Amazon’s site hits. Chances are good that their members shop at Amazon. I do. Rewards program members make up some of the 42 million site hits Amazon had in March. “Yeah, but you couldn’t make up many of those because MyPoints just had 4 million hits.” Wrong again. Ebates doesn’t reward for Amazon (Amazon doesn’t allow incentivized traffic, so NO rewards program legally offers rebates there)…so there would be no reason for me to go to Ebates and click through from there to Amazon.
The second logical flaw is that the comparative number of site hits is an indicator of popularity. According to Alexa.com, 24% of all global internet users visited Google yesterday…compared to only 1.7% that visited Amazon.com. I guess Amazon isn’t catching on!
A better indicator of how popular rewards programs are would be the total online sales in the US in March (or December, or for whatever month has the most updated data) compared to the total sales made through rewards programs in that month.
What percentage of online shoppers go through a rewards program? Who knows? A person can (and often does) use more than one rewards program for shopping. You don’t want to double-count them.
Suffice it to say that we know for a fact that there are MILLIONS of Americans shopping through some sort of online rebate site. For them, the extra couple of clicks is worth it to earn the “2% to 3%” cash back (which as I illustrated above is often WAY more than that). They don’t lack the “mental bandwidth” it takes to remember to click through their rewards program before shopping.
I hope that the LA Times article does not scare off consumers from using rewards programs, as they are very simple to use and result in substantial rebates just from buying things you’d buy anyway. Consumers just need to be informed about which rewards programs pay the most, have the best customer service, and get the types of rewards they want shipped out to them the fastest…which is why CompareRewards is here. Please feel free to browse the site, and please check out my reviews of the rewards programs mentioned in this post. If you’d like to compare many of the programs at once, you may find my Rewards Program Snapshot helpful.
As always, I welcome your comments or questions below or send me an email here.

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