The business of online loyalty programs
November 18, 2009 10:10 AM Subscribe
posted by Nelson (26 comments total)
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A US Senate Committee just released its
on online loyalty programs
. Combined, Webloyalty
have made $1.4 billion in the past ten years charging customers $10-$20/month for marketing program memberships. Unfortunately, many of their customers (4 million this year) have no memory of authorizing the charges.
A key enabler for signups is merchants passing credit card numbers directly to the loyalty program; the customer never has to enter billing data. Such "card on file" transactions have a conversion rate of roughly 4% (compared to 1% without). Many well-known Internet brands
such as 1-800-Flowers, Classmates.com, Priceline, Expedia, Orbitz, Travelocity, Fandango, Buy.com, eHarmony, and Yahoo are paid $10 to $30 per signup to entice their customers to join the marketing programs.
There's been a litany
for years about these programs. In response the marketing companies have promised to change their practices, in some cases meticulously documenting
page layout changes.