One of the best ways to earn miles is to go through an online shopping portal to make all of your purchases. That’s because it’s free miles (or in the case of cash back portals, free money) for something you’re going to do anyway.
It costs you nothing and you get miles or a rebate. There are offers like 2 to 10 miles per dollar spent at whatever merchant you were going to buy from to begin with. And sometimes there are bonuses, like earning 2500 bonus miles for spending $250 through a given shopping portal in a specific period of time (amounting to an extra 10 miles per dollar).
Online merchants will pay commissions on sales to websites that advertise them. The way these shopping portals work, then, is to give back a large portion of their commission to the consumer, as an inducement to start off at their portal. And they provide the commission in the form of your preferred loyalty currency.
And yet with all of the players involved — an airline frequent flyer program, an online retailer, and a mileage mall technology provider — things can go wrong. In a low margin business (“sure they lose money on each transaction, but they make it up in volume!”) customer service investments haven’t always been a top priority. And that means frustrated consumers expecting to get miles, when those miles don’t post correctly 100% of the time. Every time I mention an online shopping portal bonus, I’ll always get readers leaving comments about times when they didn’t get their bonus.
I spoke about all of this last week with Tom Beecher, President and CEO of Cartera Commerce, a company which runs many of the online shopping portals in the market.
To be sure, this isn’t a perfectly-transcribed interview. My questions especially aren’t exactly how they were phrased to Tom and I’ve condensed a few sections of our conversation together to make more sense organizationally and for easier reading in what was a wide-ranging discussion that went over our originally planned 30 minutes. We kept talking, and I made him late for his next appointment. It was great fun, and he was more than generous with his time.
Cartera seems to be behind a lot of the online shopping portals, almost ubiquitous, but also almost always in the background. How big is Cartera, and what’s the advantage to your partners in working with you over another shopping portal provider?
We work with 4 of the 10 largest credit card issuers, and 6 of the 10 largest airlines in the U.S. Our goal for the airline is to be an end-to-end service provider, to build and host a website that matches their look and feel, branding, and to the consumer it still feels like they’re interacting with the airline. We go out and assemble a network of relationships with about 935 online retailers.
Because we work with all these airlines and banks, we have an audience of 90 million consumers, and are able to leverage that huge audience in negotiations. As a result we’re getting commission rates above what they’re willing to pay others, ‘above rate card,’ and a large portion of that goes to the consumer translated into whatever loyalty currency is most relevant to them. In many cases in addition to the commission rate, there’s often another offer on top of that like free shipping, or a 10% discount on their purchase.
You mention getting discounts in addition to miles, won’t using a coupon code often eliminate the ability to earn miles for a purchase?
The way the mechanics actually work, the consumer who goes through one of our airline shopping portals, a one-time tracking gets set up. They click to complete the transaction at the retail site. It’s fine to put in a coupon code that came from our site, but if they use a coupon code that came from somewhere else that will turn off – break the link – and they won’t get the benefit of the loyalty currency.
The safest thing to do when shopping through one of our sites is to only use coupon codes that come from us. It’s possible that other coupon codes won’t break the link, but often they will, and it’s hard to predict.
Shifting gears to the potential here, how many miles are people earning for online shopping?
We dug into some of our data, we haven’t looked at it exactly this way before, but there are people earning lots of free trips in a year. We have some people who spend $10,000 a month through our portals. There are people who do that who can earn hundreds of thousands of miles a year. We even have people who have more modest spend, $1000 a month, who are able to earn more than 100,000 miles in a year.
There’s a tremendous opportunity here. Total online shopping in the last holiday season was $40 billion dollars. At an average rebate in miles that could mean earning 85 billion miles. We’re already awarding billions of miles in a year.
Is it just miles, or do you manage any of the cash back sites too?
Some of the bank sites we work with are cash back, but we really focus on the loyalty currency, and that’s why you see us working with airlines.
What do you see as the biggest challenge going forward, or the biggest area of change in earning miles for online shopping?
One area that’s really interesting, both an opportunity and a challenge, is the rise of mobile. We’re just starting, investing in mobile the last couple of years, to see e-commerce shopping on mobile. We see more on tablet than on phone, that’s going to shift shopping behaviors in ways nobody can predict.
We’re in various stages of progress optimizing websites for mobile shopping. Most of the airline sites are moving in that direction if they aren’t there yet. Another direction we’re moving is embedding our offerings in mobile apps.
Regardless of the platform, my understanding is that you’re giving most of the revenue from merchants back to your customers. And at the same time many of your shopping sites seem to offer frequent bonuses to encourage more shopping. How does the economics of that work?
The bonuses are trying to drive more engagement among shoppers. Once consumers have had the chance to make a couple of purchases through one of our sites, they tend to get hooked, they really ‘get’ the value proposition, so anything we can do to drive that value proposition home makes sense. The best thing for us is the person who goes online to shop, and starts their shopping session on one of our sites.
I don’t want to give you any ideas, as a consumer this wouldn’t be good for me, but I wonder why you offer these bonuses so broadly — to consumers that are already hooked — rather than more targeted bonuses meant just to engage new customers?
Probably we’ll see more targeting over time as we get more sophisticated in our marketing, but there’s nothing wrong with rewarding loyal customers either.
Let’s talk about when things go wrong. How can a consumer make sure they’re getting the miles they expect?
We send out a confirmation email within a couple of days of the purchase, so we let you know that we got the tracking, everything worked and the miles are on their way. Depending on the retailer and their return policy and airline policy, this can take 45 days for miles to get posted though typically it’s much faster.
It can take time to research a consumer issue, often we have to go to the merchant to get the information on a sale and so we have to wait for the merchant to get back to us.
The best way to handle things is to reach out to us directly. It’s a business where we have more than a million consumers who shop us in any given year, there’s a lot of people coming through the system. I’m sure there are times when we don’t respond as quickly as we can, or it takes longer to resolve an open issue or question that it should. But it’s not an economics question, sometimes it just takes awhile to assemble the facts. There are times when consumers get frustrated as I would in my own transactions. We’ve invested substantially in customer service in the past 18-24 months, and made great strides.
We’ve made technology investments and substantially expanded customer service staffing, including using outside resources and in-house resources. We’ve substantially ramped up the investment in customer experience.
I’d like to talk about what may be a touchy issue. It’s one thing for consumers to get frustrated when miles don’t post automatically the way that they should, and when they’re not getting fast turnaround on having an issue resolved. But what about that game with two cups and a string, information on an offer from a merchant gets posted incorrectly and you decide it’s too generous to stand behind? I’m thinking here of three and a half years ago where there was a $5 Verizon phone charger which promised 83,000 miles.
With the exception of thankfully exceptionally rare things like the Verizon issue, I think on its face a lot of people thought it was a mistake. With the exception of things like that where there was an error, the offers are good and people can rely on that. That happened once in 5 years.
Tell me, I notice that sometimes merchants are available through one shopping portal but not another. Why is that?
We have about 935 merchant in-network, including 47 of the 50 largest online retailers, offering collectively more than 20 million products. Consumers come to our site and can find each product or merchant. The particular offers vary program-by-program, some don’t use all of the merchants. A program can opt out of any particular merchant, usually because they have a separate deal with that merchant, or a particular vendor might compete with the company offering the particular shopping portal.
[GL I take this to mean that’s why you won’t see mileage-earning for Expedia puchases on an airline’s shopping portal — the airline wants you to book on their own website, not be rewarded with their mileage currency for booking through a competing website.]
Do you want customers to know more about Cartera Commerce, or are you happy in the background? If background, then what do you want consumers to know?
We’re perfectly happy to be a background brand, an “Intel inside” brand to use the old formulation. The important message is that if you care about loyalty currency on your credit card, this is something you shouldn’t miss out on and odds are you’re missing out
There are a lot of people who care about the currencies we offer. There’s something for free that we’d love you to take advantage of.
Thanks, Tom, for your time. I know I’ve kept you longer than we planned and I really appreciate it.