Why Plugins Are a Double-Edged Sword for Marketers
Growing up, my brother and I would go grocery shopping with Mum. The best part of the trip was discovering ‘Shop A Dockets,’ which are printed coupons on the back of receipts. On the back of my Mum’s shopping receipt, there would be these advertisements. Sometimes we’d get lucky, and the ads offered a discount. Next thing we know, we’re at a movie theatre with a free meal in our laps!
One aspect of using the Shop A Docket was that it wasn’t imperative to what I was going to do. Of course, I would use it for a free movie meal if I had it in hand but forgetting it didn’t stop me from going to the movies. Shop a Docket or not, I’m going to the movies.
Image of Shop A Dockets, coupons found on the back of in-store receipts
Like myself, coupons and discounts have grown up in that they have become more savvy, experienced, and knowledgeable. Thanks to Shop a Dockets, I can always find discounts when online shopping. This is with the assistance of easily downloadable plugins (Google Chrome extensions or widgets are also names for these). Plugins live at the top right corner of my browser and are always turned on. They help me with a variety of things, including spell-checking, tracking SEO scores, recording meetings, and notifying me when an online discount is available.
In terms of how plugins aid my online shopping habits, discounts will automatically pop up via the plugin when I am about to make a purchase. However, as I said before, the plugin helps save, but not the “make or break” to my purchase. I visited the site for a reason, and that reason is to make a purchase. Nevertheless, this world of cashback and discounts is massive and has become quite a tech race. Even when they have little involvement in the transaction to convert a sale, companies compete to get a piece of commission from online transactions.
Rakuten, Honey, TopCashBack, WikiBuy, and more are spending millions on getting customers to download their plugins, which will enable customers with their own online Shop A Docket.
It’s worth mentioning how powerful these brands have become in the last three to five years:
But let’s face it — there is no such thing as a free lunch.
For starters, brands have to pay to play— every plugin requires a company to pay a baseline. Of course, brands are encouraged to increase this baseline from plugin providers. Brands that invest more money in plugins will have a more significant presence in the number of brand promotions that appear for customers.
From a brand and business perspective, every customer that downloads a plugin means one and one thing only: you will never have that full-paying customer ever again. Every time a customer who is already in your online store proceeds to checkout, she will automatically have activated the plugin that searches the internet for the best discounts. If multiple plugins are downloaded, these plugins will compete for the customer’s favor. Flashy discounts and moving banners try to entice customers to click on their activation code over another.
While brands may think that plugins are helping grow sales by finding savings that make customers believe they are getting a good deal, these plugin companies have an entirely different agenda. For example, plugins can incentivize customers to navigate from one brand’s page to a competitor where (perhaps even better) discounts are offered.
Think about it this way: let’s say you are in a shopping mall, and a person begins spruiking outside your store. (Spruiking means “selling” or a “sales pitch” for all you non-Aussies out there.) The person is telling your customers to go to different department stores because they can find the same product, but for a better price. Legally, this is allowed. Plugins are doing the same thing, but online. Place yourself in the brand’s shoes, and you can see how problematic (and unbelievably annoying) this is; you are paying these plugins to drive sales, not lose customers.
Okay, so, simple solution: don’t pay for plugins if they drive your customers away.
It’s not this easy, though. Look at what happens to customers who have active plugins when on a site that does not pay the cashback sites:
Rakuten plugin blocking Home Depot’s page.
Home Depot is currently not on Rakuten Rewards. By not investing in cashback sites, Home Depot is still being affected because anyone can download plugins. Furthermore, Home Depot is losing customers as plugins drive its customers to other competitors that pay for cashback deals. Let’s break down how this process works:
The plugin is activated on my computer with Rakuten, and I have googled “Home Depot” and clicked on its page. On the homepage, the plugins automatically populate a banner with competing companies that are within the Rakuten network. These plugins are promoting Ace, TrueValue, and Walmart — competitors to Home Depot — all so Rakuten can receive a commission on a successful sale somewhere with that customer. Even though Home Depot has spent millions of dollars on advertising, with this plugin banner, customers are lured away regardless of which channel brought them to the site; in my case, Google search.
Another example of how these plugins actively lure customers from the 400-pound gorilla Amazon to another juggernaut is via Houzz — though Houzz offers commission. As you can see in the below screenshot, Honey, Wikibuy, and Rakuten are dropping their advertisements on a high intent shopper. They are not creating any value to the brand but saving the customer money.
Houzz plugin pop-up enticing an Amazon user with a cheaper price.
Plugins entice customers and help brands seem like they are driving sales. In this process, these companies have also created a tech battle. As more brands invest in these plugins, cashback companies must compete for customers to use their particular plugin and not a competitor’s. If you’re like me and have multiple plugins activated on your browser, when you click on a coupon to receive your discount, other plugins will immediately fire. These companies will compete to divert the customer to use their promotions instead. The below example is a customer using Rakuten and then attempting to use RetailMeNot.
A Rakuten pop-up blocks a customer from interacting with RetailMeNot’s plugin
In my opinion, there is nothing wrong with what they are doing. Cashback companies work to receive commission by making customers commit to their service offering over others.
Plugins are not going away. Large brands worldwide are still trying to understand the full extent of plugins and determine how effective they truly are at driving sales, not just discounts. The truth is that no one actually knows — yet. However, we know Amazon recently released a security risk on Honey, stating it was malware. If the largest online retailer, Amazon, is watching the “plugins space,” then there must be some concern around them.
Of course, brand teams can monitor the growth of plugins on their own businesses by tracking how they’re currently being used within a customer’s journey. There are great SaaS tracking tools and affiliate networks that provide brands with a breakdown of the customer’s journey, digital touchpoints, and dynamic commissioning. Understanding how to use affiliate networks and SaaS platform tracking tools together can ensure brands aren’t paying full commission for customers who have already prepared to transact.
It’s important to remember that the tail doesn’t wag the dog. Brands have the power to request visibility from the companies applying the plugins; after all, they are the ones paying the commissions. Seeking full transparency can be a little tricky as these plugin companies may not want to provide it, but brands must remember that they are paying for results. After all, only from tracking can we monitor how effective these plugins are benefitting the brands.
Looking back, I cannot say that using Shop A Dockets fully incentivized me to go to the movies or buy a meal with a soda, which leads me to wonder if plugins actually drive incremental sales for brands online?
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Don’t get me wrong. I use all of them — Rakuten, Honey, UseJewel, Befrugal, Wikibuy, RetailMeNot, Groupon — and I do save money. But, just like as a kid, the Shop A Docket isn’t determining whether I am going to the movies or not. After all, if I don’t have the plugin activated when purchasing an item online, I’m still buying the product.
Posted by Jack Aldridge