Retailers Will Now Pay Up To 40% Commissions—That’s How Too-Generous Rewards Will Make Money

Rove Miles may have a better answer to the question I’ve had about its business: how do you keep giving customers so much without eventually having to pull back? At oneworld’s Loyalty Summit on Tuesday, September 8, CEO Max Morganroth pitched targeted card-linked offers earning commissions as high as 40%. Rove isn’t just a (high value) consumer rewards program. It’s also a B2B company. I was tapped to question the startup pitches at the end of the day. There were companies validating status matches, translating travel data for artificial intelligence, and gamifying card-linked offers, among others. Rove’s presentation was probably the thing that generated the strongest response from the audience. When I first spoke with Rove about a year before its public launch, they were going to launch a credit card and become a points transfer partner for other banks. They wanted to give smaller banks a travel rewards offering, approve more younger customers by looking at the cash flowing through their accounts, and make redeeming miles easier by handling the booking through their platform. They’ve obviously pivoted since then. I’ve been impressed with what they’ve built, but my concern has been: They give a lot back to the customer on each hotel booking or shopping transaction. They need to be that rewarding because they don’t have a natural customer base of their own, like an airline’s passengers or renters already paying for their housing through a reward company’s platform. If they eventually cut rewards to make money, they risk losing the customers who came for those rewards. Can they scale a loyal, repeat customer base quickly enough? Rove has raised more money than I’d realized and is moving quickly. But Morganroth’s presentation offered another way to think about their economics. The pitch was to use behavioral data to identify customers a merchant particularly wants to win, like offering a Nike customer rewards for buying Adidas. The merchant is frequently willing to pay a much higher commission for that customer than for a generic shopping portal transaction. Morganroth described commissions reaching 40% on targeted offers. That’s the merchant’s payment, and it funds both rich rewards and high margins for the loyalty program. The audience seemed pretty impressed. The topic of my opening panel had been “The Next Co-brand,” and Max said this was the next cobrand. White labeling the technology they’ve built for consumers to other loyalty programs may let Rove earn money helping them target offers and reward transactions, without having to acquire every one of those customers for its own consumer platform. Topics on this page