Loyalty programmes competing for the attention of online shoppers should be focusing on miles and cut back on offers like free shipping when developing programmes, according to an analysis of online shopping behaviour conducted by mobile shopping and bill payment app developer Billeo Inc. This article is copyright 2012 The Best Customer Guide.

The company's research found that the rewards being offered by a loyalty programme have a direct impact on where a consumer shops, what brand they choose, and what payment card they use to make a purchase. According to the online shoppers in Billeo's network, customers tend to prefer miles to any other rewards that they were presented with during the past year.

"Our analysis showed that online shoppers are almost six times more likely to use an offer that includes miles compared to one that does not," said Murali Subbarao, CEO for Billeo. "The rising cost of airfares has turned earning miles into a significant motivator for consumers who are shopping online."

Other significant findings from the study included:

  • Online shoppers prefer rewards points and miles offers. In fact, online shoppers are almost five times more likely to use a rewards offer that includes the ability to earn miles or points than one that doesn't.
  • Offers that allow online shoppers to earn rewards points or miles are more appealing, as these offers average a 14.5% click-to conversion rate.
  • Offers that do not include points or miles, such as free shipping, are less appealing, with an average a 3% click-to-conversion rate.
  • Usage increases for miles-only offers, with online shoppers being almost six times more likely to use an offer with miles than one that doesn't offer miles or points.
  • Offers that include miles have a 17% click-to-conversion rate, versus the 3% click-to-conversion rate of offers that do not offer points or miles.
  • Online shoppers are almost one and a half times more likely to use an offer with miles than an offer with points.
  • Offers that include rewards points have a 12% click-to-conversion rate, versus the 17% click-to-conversion rate of miles offers.
  • Online shoppers claimed to earn 11,600 loyalty miles per year, on average.

"Miles, free shipping or points - the options for online shoppers are varied to say the least - and yet the majority of these offers go unused," said Subbarao. "Online shopping presents a huge opportunity for brands and merchants looking to increase customer loyalty and financial institutions that need to drive card use. The marketing professionals who run loyalty programmes just need better insight into what shoppers prefer."

The analysis is based on the 2011 aggregate shopping habits of more than 100,000 online shoppers in the Billeo network. More than 40 banks, 20,000 billers, 1,500 merchants, six of the top ten US card issuers, and two of the top five US airlines are part of the Billeo network. Cash back offers were not included in the study.