What I have learned about ‘loyalty’ and ‘deals’ in the first week of Shopper Points

Ten days ago, I launched Shopper Points.  This is a site devoted entirely to Tesco Clubcard and Nectar and is designed to help the many, many people who come to HFP looking for Clubcard deals but are put off by the frequent flyer focus.

All of the best Clubcard deals will continue to be covered on Head for Points, but Shopper Points will cover all bonus point offers.  We – and I genuinely mean ‘we’, as I have someone helping me write it – will also be desperately trying to find some value in Nectar for the Sainsbury’s shoppers out there :-)

Anyway ….

To launch the site, I booked some Facebook advertising.  This was targetted at people who had shown an interest in Clubcard and the ad promoted my exclusive TopCashback sign-up deal.

What could go wrong?  I was showing an advert to people who are already interested in Clubcard, offering them 1,000 points for joining TopCashback.  TopCashback, remember, is a business with 4.5 million existing members and is one of the fastest growing private companies in Britain.  If you choose the free option, it doesn’t cost you a penny to join.  Who could be unhappy about that?

Suddenly, however, I start getting comments posted on the Facebook ad.  (The ad was technically a post and could therefore be commented on.)  ‘Scam’.  ‘Must be a scam’.  ‘Seems too good to be true, must be a scam peeps’.  ‘Scam’ etc etc.

These were comments posted by people who had been shown the ad in their feed.  Without actually bothering to read about the deal, they decided to diss it.  Not one person actually gave any reason for saying what they said.  These are people who had already shown an interest in Clubcard, remember.

This has never, ever happened with any Head for Points article.

It set me thinking.

Shopper Points - Header

Let’s look logically at some of the deals I discuss on HFP.  Let’s take the Hilton Visa card, for example.  This gets you a free night at ANY Hilton Family hotel when you spend just £750 – a pretty easy stretch for most people in a full-time job.

This bonus is worth £250 if used properly, ie at an expensive Hilton, Conrad or Waldorf-Astoria.  On that basis, why haven’t 2 million people taken out this card?!  Why doesn’t everyone in the UK travelling to New York get this free card, spend £750 and get a free night in a suite (the hotel is all-suite) at the five-star Conrad?  A couple could get two cards and get two free nights.

Let’s take something more straightforward.  Amex Gold is free and comes with 20,000 Membership Rewards points.  Even if you ‘waste’ them by redeeming for Amazon gift codes, you will still get £100.  OK, hitting the spend target on this card is harder but it is still £100 for almost nothing.  For someone on the average UK salary of £26,500 (£81 per day net) we are talking about 1.25 days of salary for 20 minutes work of filling in the form and cancelling the card later.

When I go into John Lewis, I am bombarded with people desperate for me to take out a John Lewis credit card – for which I will get a £10 sign-up bonus.  Hilton will give you something worth 25x as much.  Amex Gold is worth at least 10x as much.

Why do these deals never go mainstream?  I know that frequent flyer schemes are complex – this site wouldn’t have much to write about if they weren’t! – but the Hilton and Amex Gold offers are straightforward.  The personal finance sections of the newspapers don’t cover them, even though they get excited about a free £10 John Lewis voucher.

As I found this week, the very idea that a company may be giving away 1,000 Tesco points as a marketing incentive is seen as literally unbelievable by some people.  Logically it is sensible marketing by TCB, especially compared with an expensive TV or press campaign which would cost them far, far more per new sign-up.

In the frequent flyer circle, we ‘get it’.  We understand why companies offer deals, even deals which seem remarkably generous.  Even Qatar’s £800 business class fares to Asia make sense when you know they have a high sunk cost (a plane), a perishable product sold in a small market (business class seats from Copenhagen) and modest variable costs (low fuel prices). It isn’t really ‘something for nothing’ when you know how the business works.

Similarly, TopCashback knows after all these years how much revenue it will make from the average new member over the first few years.  If they can sign people up for, say, 50% of that cost (ie the cost of the Clubcard points) then it makes perfect sense.

Do the wider general public fail to understand how business works?  Or have they been burnt by too many dodgy deals in the past?  Whatever the reason, the reaction I got to my Facebook advertising this week was absolutely not what I expected.

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Comments

  1. In all seriousness, I enjoy sports betting and I’ve been known to visit casinos in real life, but online slot-machine type stuff scares me. The psychology is so obviously manipulative, and designed by such clever people – and given that something like 1% of people are meant to have a tendency towards gambling addition, do I really want to risk finding out whether I’m one of them? The occasional tenner on a Six Nations match will do me :-)

  2. There’s no such thing as a “credit rating” in truth – just a credit record, and then individual lenders use their own criteria to decide how they interpret it. But with the very greatest of respect, if you’re being given “4 out of 5” on some credit reference agency’s scale, then that is good but not fantastic and you might want to focus on paying down your outstanding balances before you start doing anything clever.

    With that said, it’s hard to see how *occasionally* switching cards (once a year say) would count as a black mark for any reasonable lender. After all, you’re doing it for an unimpeachable reason, because you prefer the incentive scheme offered by the other card, and not because you need to do it to keep yourself afloat. Or to look at it another way, ask yourself why a potential mortgage lender – looking at a report with no CCJs, no missed payments, a solid record of paying down balances and a sensible amount of credit overall – would care that 6 months ago you switched from Tesco to Amex.

    (I’m not sure I necessarily agree with the advice to keep the Tesco card open, given that you have three cards on the go already – the total amount of credit available to you is very definitely a factor in deciding whether you get any more. But that’s where it all gets a bit unknowable. Personally I’ve always tidied up accounts I don’t use any more, and I’ve never in my life been declined for anything, so I can’t be doing it completely wrong.)

  3. Raffles, I think you live in a different world from these people.
    There are stats around that 11 million people in the UK receive some sort of benefit. These tend NOT to be the type of people that are accepted for an AMEX gold card.
    At the opposite end of the spectrum, there are undoubtedly quite a few who value their time more than “chasing” would be of value to them.

    • You say that but Amex Gold earnings requirement is £20K household total.

      You pretty much get that on benefits if you have children.

    • As to your second point, if you prefer to do other stuff rather than accumulate the Avios that give you the freedom to travel, nobody here would ever have a problem with that.

      We might acknowledge that we see things differently – but you are free to make personal choices – or perhaps sensible choices if you don’t travel or holiday or have any use for Avios so why are you here, exactly?

    • Well said grex9101 – chasing points IS of course available only to those with reasonable credit ratings in the first place, who can afford to pay off their cards each month.

      • You can of course get a good credit record by working hard in your job, earning money, buying a house, paying off your debts & improving your family’s position.

        Like most of us did.

        Hope that didn’t escape you.

        • There are odd articles on redemption bargains. In some ways sticking to the high end makes it easier – IHG has 70 London hotels but only 4-5 luxury ones, which makes them easier to cover.

    • My article questioned why 2m people don’t get a Hilton card, not 52m!

      My Dad was a steelworker so, irrespective of what 16 years in the City got me, I am fully aware of how the world works.

      My kids are screwed, of course, but I know :-)

  4. Yes. 2 charge and 2 credit allowed.

  5. Yes. I did for the first half of 2015.

  6. Roger Wilco says:

    What I don’t understand is the vigor many of the posters are proselytizing Avios/miles etc to the masses. Don’t they get it? So what? Do they think you’re a weirdo for flying F for “free”? Tell them that you gave up drinking/smoking/whoring and of the savings paid full price for the F flights. Tell them they could do the same if they gave up those vices :-))

    • Purely out of benevolence & care for my fellow human beings.

      Plus winning is quite a driving factor, much more enjoyable if you win in front of a crowd :)

      No1 T3 lol

  7. That’s how all? of us think, but I suggest we are in a minority.
    How much money I have in my wallet (as opposed to my wealth and income) makes no difference to how I spend.
    But put more money in my wife’s wallet and she will spend it faster.

  8. The simple fact is a lot of people are scared away from credit cards by the horror stories of friends and family who have run up huge debts.

    Financially astute people (like the average HFP reader) use these to their advantage. Financially irresponsible people (like the average active Facebook user, and the labour government!) use them wrong and get themselves into debt.

    Advertising like that on Facebook may not be the optimum approach. Personally my view of Facebook users is there are two types: those doing things that are interesting enough to want to read – who are too busy doing interesting things to post about it on Facebook; and those who do nothing interesting, in many cases not even in employment – who have lots of free time to post about the mundane crap that makes up their lives. I suspect it is the latter half marking Rob’s post as a scam…

    • I am currently thinking carefully about how credit card stuff is done on Shopper Points. I have Anika working on something but I have told her to do it from her own perspective of cards (as a young woman on variable freelance income) as opposed to mine.