EcommerceBytes-Update, Number 235 - March 15, 2009 - ISSN 1528-6703     3 of 7

eBay Considers PayPal Loyalty Program

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eBay appears to be considering customer loyalty programs in addition to its heavy use of couponing. eBay had tested an "eBay Bucks" shopper rewards program last year that may be resurrected this year, and eBay is currently surveying users about a PayPal Loyalty Program that offers special benefits to top buyers.

eBay believes it is cheaper to retain existing customers than to acquire new customers. In fact, eBay's Board of Directors added the Net Promoter customer-retention program to the eBay Incentive Plan (eIP) in the second half of 2008 - eBay executives may lose up to 20 percent of their bonuses if they don't meet customer retention targets. Management's current coupons efforts reward customers for returning to eBay by giving them money towards a purchase. What isn't clear is whether eBay considers sellers to be customers in its customer-retention metric.

A reader who participated in an eBay survey on Friday about a PayPal Loyalty Program reports that participants of such a program might be able to get certain benefits when their total PayPal purchases reach $3,000 in a year, and even more if they spend $5,000 through PayPal. Examples of benefits include Refund Protection, Enhanced Buyer Protection, Discount Coupons / Cash-Back, Donation Matching, Enhanced Customer Support, "No/Reduced Fees" Days (could be no fees or free shipping), Debit Card Cashback and Exclusive Members-Only Website and Online Community. Benefits could also include the following:

Members-Only e-Newsletter: Monthly newsletter with "in the know" information including latest trends across industries, offers, benefit enhancements, innovations, member feedback, and interviews.

Member Showcase: Opportunity to showcase PayPal members on the PayPal homepage (free advertisement) or on any of PayPal's other marketing communications such as the consumer or merchant newsletters.

Members-Only Special Offers: Members-only special offers, such as discounts from participating merchants and previews to sales and auctions before it is available to the general public.

PayPal Loyalty Program Member Events: Special organized events for Loyalty Program members and up to two friends. These events feature merchants showcasing their new inventory of the hottest products and distributing discount vouchers, and also discussions with key speakers in the industry. These events also provide an opportunity to "network" with other members and merchants.

PayPal Loyalty Program Member Icon for Buyers: An online icon (symbol) that identifies you as a member of the PayPal Loyalty Program and communicates recognition, credibility, and trust among sellers and buyers alike.

The survey defined Enhanced Buyer Protection as one of the following: Receive a "temporary credit" to your account whilst your dispute is investigated (for PayPal users spending a minimum of $3,000/year), or: Receive a "temporary credit" to your account whilst your dispute is investigated AND get access to a specialized agent to guide and support you through the process and provide you with status updates (for PayPal users spending a minimum of $5,000/year).

Surveys often indicate eBay's current thinking about new programs or enhancements, so while it's best not to jump to conclusions about the existence of a PayPal loyalty program, it's quite telling about the possibilities eBay is exploring.

In 2005, eBay terminated its Anything Points loyalty program. It began testing a new shopper rewards program last year called eBay Bucks. (A cached version of the page said, "The 2008 eBay Bucks program has ended. eBay Bucks will be back in 2009 - stay tuned!" but the page now goes to an error message.) However, at least one reader was exposed last week to a listing with the eBay Bucks offer on a listing ending March 12th.

It appears the PayPal Loyalty Program under consideration would go beyond eBay to all PayPal purchases. The move comes as Google pulls back somewhat on its online payment service. Last week it raised fees for Google Checkout and eliminated a key promotion tied to merchants' use of AdWords. However, Amazon continues to push its payment service to both merchants and third-party developers.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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