Fetch Rewards is a company that allows users to earn rewards back on their purchases from several companies, eliminating the need to participate in brand-specific rewards programs.1 In exchange for a partnership with Fetch Rewards, companies can gain access to certain user data.2 User data analytics allows companies to strategically target customers based on their purchasing habits and favorite rewards, among other usage metrics. Would you give up data on your spending preferences for appealing rewards and personalized advertisements from your favorite brands?
Purchasing behavior over the last few decades has shifted in favor of e-commerce and home delivery, which makes digital marketing strategies essential to a company’s promotional mix. Customer retention is particularly important to online presence and sales, and a rewards program is one way of accomplishing this. Over 90% of companies utilize loyalty programs and other customer engagement strategies.3 Why? According to some research, “loyalty programs generate between 12 and 18 percent incremental revenue growth.”4 This growth, however, is dependent on a balance between cost and return.
If the cost of implementing the loyalty program is greater than the return on investment, the program will not be effective; the rewards have to be enticing enough for customers to partake as well as financially rewarding for the company. The launch of the Chase Sapphire Reserve credit card, for example, was hugely successful – far more than Chase had anticipated. In its first year, customers were rewarded with a 100,000 points sign-up bonus and additional perks,5 but the sign-up bonus was reduced after the first year. Because the point bonus was so appealing (and because of well-constructed marketing tactics), Chase faced problems with supply for creating the cards and had to look for new solutions to retain customers.6
Frequent flyer miles provide another example. Companies reward purchasing behavior through loyalty programs to entice new customers, establish loyalty, and reduce the number of customers switching to competing brands. It’s easy for customers to switch between airlines frequently, so to increase customer retention, loyalty programs were created. After purchasing a number of flights with one airline, the reward is often a free flight, thus incentivizing continuously spending with one company. In some instances, customers find ways to take advantage of these rewards programs by “stealing” miles. To avoid this, airlines began implementing expiration dates on frequent flyer miles. This also forces customers to spend on flights in a shortened time frame.7
Fetch Rewards allows customers to scan their receipts, upload to the app, and get rewards on their purchases – usually in the form of gift cards – without the hassle of signing up for several loyalty programs.8 Companies partnered with Fetch Rewards are most likely already using loyalty programs as part of their promotional strategy, but user data can be beneficial to improving their success rate. This can help spread brand awareness and companies can advertise to customers who are more willing to purchase their products.
See how Fetch Rewards works:
Because it can be difficult for companies to retain customers on their own even with loyalty incentives, companies such as Fetch Rewards can play a useful role in getting customers to repurchase. The business of customer rewards is growing, especially as prices continue to rise. With these increases in price, customers are more likely to try rewards programs or apps like Fetch Rewards.9 Currently, “Fetch Rewards, America’s No. 1 Rewards App, is now equivalent to the nation’s seventh largest retailer for annualized gross merchandise value (GMV) flowing through the platform, surpassing the $100 billion mark.”10
While Fetch Rewards and similar rewards-based companies grow in size and support, they may face issues of customer privacy brought about by their methods of collecting and distributing user data. On one hand, many customers value the personalization produced by using cookies to send targeted advertisements. On the other, older generations in particular are wary of the invasion of privacy that data collection and usage appear to create. In the future, changes to privacy laws and Internet cookies could change the way marketers reach customers online.11 The implications could include limiting the amount of data companies are able to collect and use, which would most certainly impact digital marketing strategies such as personalized advertisements and product suggestions based on purchasing preferences.
Questions marketing managers might consider:
- How might digital marketing strategies change if regulations are imposed on user data privacy?
- When developing a rewards program or promotional campaign, what strategies are important to keep in mind?
- As mentioned above, 90% of companies have loyalty programs or customer engagement strategies. How could you make your program more appealing than your competitors?
References
1 Deighton, K. (19 January 2022). Fetch Rewards Hires Facebook Retail Executive as Its First Customer Chief. The Wall Street Journal. https://www.wsj.com/articles/fetch-rewards-hires-facebook-retail-executive-as-its-first-customer-chief-11642593602
2 Fetch Rewards. (6 December 2021). Fetch Privacy Policy. Fetch Rewards. https://www.fetchrewards.com/privacy-policy/
3 Wollan, R., Davis, P., De Angelis, F., & Quiring, K. (2017). Seeing Beyond the Loyalty Illusion: It’s Time You Invest More Wisely. Accenture. https://www.accenture.com/_acnmedia/pdf-43/accenture-strategy-gcpr-customer-loyalty.pdf
4 Wollan, R., Davis, P., De Angelis, F., & Quiring, K. (2017). Seeing Beyond the Loyalty Illusion: It’s Time You Invest More Wisely. Accenture. https://www.accenture.com/_acnmedia/pdf-43/accenture-strategy-gcpr-customer-loyalty.pdf
5 Steinberg, E. (24 March 2021). Chase Sapphire Reserve Credit Card Review. The Points Guy, LLC. https://thepointsguy.com/guide/chase-sapphire-reserve-review/
6 Steinberg, E. (24 March 2021). Chase Sapphire Reserve Credit Card Review. The Points Guy, LLC. https://thepointsguy.com/guide/chase-sapphire-reserve-review/
7 Rosen, E. (20 May 2021). 40 Years of Miles: The History of Frequency Flyer Programs. The Points Guy, LLC. https://thepointsguy.com/guide/evolution-frequent-flyer-programs/
8 Fetch Rewards. (2022). Fetch Rewards Software Development. LinkedIn. https://www.linkedin.com/company/fetch-rewards-llc
9 Deighton, K. (19 January 2022). Fetch Rewards Hires Facebook Retail Executive as Its First Customer Chief. The Wall Street Journal. https://www.wsj.com/articles/fetch-rewards-hires-facebook-retail-executive-as-its-first-customer-chief-11642593602
10 Geyer, A. (1 December 2021). Fetch Rewards Surpasses $100 Billion in Actionable GMV Across US Retail Sales, Equivalent to Nation’s Seventh Largest Retailer. Cision US Inc. https://www.prnewswire.com/news-releases/fetch-rewards-surpasses-100-billion-in-actionable-gmv-across-us-retail-sales-equivalent-to-nations-seventh-largest-retailer-301434749.html
11 Graham, M. (25 January 2022). More Changes Loom for Online Marketers. The Wall Street Journal. https://www.wsj.com/articles/more-changes-loom-for-online-marketers-11643150679
Marketing Management 