How Mile/Points Shopping Portals Work (as I see it)

Discussion in 'General Discussion | Miles/Points' started by iolaire, Aug 15, 2011.  |  Print Topic

  1. iolaire
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    iolaire Gold Member

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    Last week and this the Miles/Points Shopping Portals have received a lot of PR for offers which look to good to be true and for companies canceling orders placed by miles users to accumulate miles. I've posted in a few threads to explain how I think these programs work. This tread is a summarization of those points.

    I'm not trying to pass judgment on your attempt to get points - but rather would prefer that you understand how the programs really work. If anyone has real data points proving my assumptions are wrong please feel free to let me know.

    All of the following is my option, I might be wrong, but it's how I understand things work I'm a very small hobbyist affiliate and understand these programs are affiliate marketers also.

    I'm going to break up each section into individual posts to make this more manageable to read and quote.
     
  2. iolaire
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    iolaire Gold Member

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    How Mile/Points Shopping Portals Work
    When you see an offer saying that you can get X miles for doing Y, generally the vendor had nothing to do with the promotion. The Shopping Portal Management firm looked at what they were getting paid for an affiliate action with the vendor and made a calculation as to how many miles they can pay you if you generate a transaction.

    So when you see that you can get X points for an EasyCGI or Sittercity sign up, that means they are paying the Shopping Portal Management firm money for each sign up - http://www.allaffiliateprograms.com has lots of the pay outs listed for various companies - EasyCGI was paying $110 for new phone plans and Sittercity $40 per signup.

    A lot of background The shopping portal management companies (same with breadcrumbs, fat wallet, your favorite mileage credit card bloggers, etc..) are affiliate companies who are paid by companies to market their products. Let’s call them affiliates and vendors. The affiliates generally find the vendors through an affiliate network like, cj.com, linkshare.com and the like. Generally a relationship starts when an affiliate finds a program from they want to join in an affiliate network, they click a link to sign up and they are either automatically accepted or go into a queue where the vendor or the vendor’s contract affiliate manager approves the affiliate. The affiliate is bound by certain terms and conditions that the vendor sets. The affiliate then promotes the vendor.

    The rewards companies – like breadcrumbs, fat wallet and your local airline shopping portal are a different beast to the vendors since commonly they capture sales that will happen anyway – the customer is just using the portal to receive a reward – some firms try to prevent their products from being offered via these companies – others live and die by it – i.e. all floral companies –> versus normal affiliates like your friendly mileage credit card blogger who drive new people to sign up for credit cards – people who initially were not looking at that card….

    So the rewards companies pay the customer for using their site – in cash or miles – and receive cash from the vendor. These programs breakdown a lot in that transaction, someone makes a purchase but the rewards company doesn’t get paid from the vendor so they don’t pay the customer. I assume that customer service for these organizations is like a coupon company – there are lots of problems and if they can provide poor enough customer service a large number or customers will not follow up on missing points.
     
  3. iolaire
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    iolaire Gold Member

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    Here is how I think that data gets on the Kobie/Cartera managed Shopping Portal sites
    * Verizon creates a data feed of their products, which is uploaded to the company that they hire to provide affiliate network services (this links Verizon to affiliates), they also set the terms and conditions of their affiliate program through the affiliate network's interface - I believe that affiliate network is Commission Junction, one of the large 3
    * Commission Junction (the affiliate network) might do something to standardize the data feed or might use it as-is, they also provide the interface to the affiliate terms and conditions (that Cartera lives by)
    * Cartera downloads the Verizon data feed from Commission Junction - it might be a separate feed for Cartera or a aggregation of Verizon and other vendor data. Most likely Cartera also has a system to download the Verizon terms and conditions and use those terms to decide how to utilize the data feed.
    * Cartera then load the data feed into their own database and utilizes the Verizon terms and conditions to decide how to display each item to you and to determine how many points you get
    * For some firms I believe there are separate agreements made outside of the affiliate management companies - like for example the flower industry must work with companies like Cartera to have various valid mileage bonus programs.

    In general data feeds are very fickle, there are issues on the vendor (Verizon) side, the affiliate network (Commission Junction) might introduce other errors, and of course there are amble opportunities for issues on the Cartera side. If the Verizon terms and conditions are also being parsed in an automated fashion that is another huge opportunity for errors to crop up in the automated fashion.[/b][/b]
     
  4. iolaire
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    iolaire Gold Member

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    Affiliate Fraud
    Vendors are always dealing with affiliate fraud. Affiliates might drive a huge number of sales which are later reversed - hoping that the affiliate payments come before the sales are reversed. Affiliates might hired a bunch of people to sign up with the vendor so that the affiliate makes money. Therefore when they see a huge spike in sales/signups they will be checking to make sure those actions are not fraudulent. There is a chance that they would consider people signing up for miles to also be fraudulent activity - since basically the miles earners are being paid to complete an action that the affiliate is paid for.

    Types of affiliates
    Some vendors do not like certain types of affiliates - for example Amazon.com is not in most of the shopping portals because they either pay extremely little or no commission to the affiliates who offer a requires/coupon site. I think the thought being there, is that anyone who is going to shop on Amazon will shop at Amazon, so they don't need to pay the portals to bring customers to them. Right now there are a few portals that do have Amazon, my guess is that relationship will not last too long. Some merchants and other vendors view the toolbar affiliates as parasites, since they believe that the toolbars steal commission without doing any marketing for the vendor. The other affiliates are small and large, it might be someone promoting specific products or credit cards via a blog, or a deal site which picks and chooses items that are on sale and promotes them. I believe that generally vendors are looking for affiliates that bring new customers to them, so its people who actively market the vendors products to niche groups or to the masses.
     
  5. iolaire
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    iolaire Gold Member

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    Why you don't get your miles (added afternoon of 8/15 - sorry)
    Some reasons why a rewards company doesn’t receive commission on your purchase – maybe the rules are the first cookie gets the commission – so if you have a cookie set via an internet search, tool bar or other that overrides your purchase for the rewards program – maybe tracking is bad – maybe for whatever reason your sale is invalid in that purchase program (i.e. iPads until very recently)… you the customer might end up using a coupon that in turn results in the coupon site receiving a commission. You might have another toolbar installed from another shopping site, which does "cookie stuffing" where it insures that the toolbar gets credit for all purchases rather than the web pages you visit.

    When there are problems
    When you send in an inquiry as to a missing sale, the portal will look in their affiliate management software to see if the order was credited to them - generally they see the items sold, the commission on each, order number, price etc. - but no identifying info - so they will ask for an order number to do the lookup. Assuming they do not find the order they then need so send some sort of trace back through the affiliate management company, at some point I assume that goes to the affiliate program manager with the vendor. Also generally it takes a long time for the affiliate commissions to be paid from 30-90 days, so they might not even look into missing orders until that time is up.

    Since the companies only make money between the affiliate payments they receive versus the cost of buying miles to pay you off the margins are not that high. Just like a rebate company I assume that they are seeking a good bit of "breakage" so they get paid but you do not.

    The terms and conditions
    If you read the terms and conditions on any of these shopping sites you will see legal language on why a vendor might not pay your miles, there also will be a blanket statement that for any reason they can withhold the miles you expect. This is their blanket out - no matter how much they screw up they can fall back on those legal terms.

    Obviously not a lot of effort appears to be being made on the QC side of the shopping portal final offers - and based on the terms and conditions they offer you they really don't have a lot of reason do QC since they cannot provide the miles for almost any reason.

    Therefore it seems like the only leverage you all have is potential embarrassment or ill will generated towards the airline....
     
  6. iolaire
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    iolaire Gold Member

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    Final note - you notice how I never mentioned the airline above? That is because there is not a lot of interaction between the airline and its shopping portal. Basically they have turned over their "brand" to the shopping portal management company, who in turn buys miles from the airlines. The shopping portal is supposed to leverage and build on that brand loyalty well handing the day to day operations of the airline mall.
     
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  7. beaubo
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    beaubo Silver Member

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    It is precisely 'the shopping portal buys miles from airline' transaction that should provide the airline significant incentive to ensure that the shopping portal is recruiting reliable and capable vendors and/or affiliates. With the EasyCGI deal, its not only customers getting stiffed over earning miles, but the airlines getting stiffed over being paid for miles.

    On an anecdotal basis of the people who have posted on the EasyCGI thread that I have swapped emails with, there seems to be close to nine figures of mileage earning revenue at stake for US and HA. I would expect they have a solid incentive to join forces with the EasyCGI posters in demanding accountability and fulfillment.
     
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