For many years, businesses have been giving customers rewards or even discounts for their loyalty. But many people do not use these programs and may be missing out.
What are reward or discount programs? In reward or discount programs, loyal customers earn points (sometimes money) which is given back in the form of a reward. Rewards may include discounts, rebates, lower-costing travel, special treatments and more. The customer must accumulate a certain amount of points to redeem their reward.
Many people capitalize on reward and discount programs by using them as ways to make an extra income. And why wouldn’t they? Competition in many industries has become fierce, and only businesses with an edge are able to retain loyal customers. This guide will show you how you can make passive income from reward and discount programs as a beginner.
Passive Income From Reward Programs
Customer loyalty programs are intended to help businesses improve their profitability. But they also provide them an opportunity to earn money passively, sometimes indirectly. There are many people who have managed to turn customer reward and discount programs into a means to save and make extra cash. But how do you make money passively off customer reward or discount programs? Here is your beginner guide.
3 Types of Reward Programs
There are various kinds of reward programs with various rewards. Before joining any reward programs, it’s best to have a look at what programs are available to you depending on the outcomes you would like.
These programs have the same basic premise – you earn based on how much you spend, usually after meeting a certain minimum dollar amount during your purchase. You can earn also earn rewards based on how many visits you make to a given business, or based on the type of products you decide to buy.
Cash Back or Rebate Programs
Some programs offer cash back or rebates, whereby for the purchases you make, you get back some cash. Some give you cashback depending on how much you spend. Others provide rebates as points, which you can redeem as cash once you have attained a certain threshold. These reward programs might not give you instant benefits, but it can make you quite a bit of cash over time depending on your spending habits.
1. Discount Programs
You can also join discount programs that provide you discounts on the items you buy. With these programs, you will not get the rewards as direct cash, but instead, you will make savings, which is obviously another way to save on your spending.
Some online retailers offer a discount on the entire sale, while some discounts or rewards are offered on specific items. For instance, you might get a discount of 10% when you buy a tray of eggs. In other cases, you get a free product when you make your purchase.
2. Point-Based Reward Programs
In this case, you get points which you earn when you spend money at a particular commercial establishment. These points can then be redeemed for products or even cash. The rewards, usually awarded in the form of points, also vary depending on the product, the price of the product, or how much you have spent. In some cases, the reward offers are available only for limited periods of time.
3. Tiered Customer Reward Programs
In this case, the more you buy after signing up for the program, the more rewards you get. This can be a really good program if you purchase in bulk for your family, events or for your business. For instance food for a get together or business supplies. That way you can earn a lot of points that can translate into a decent amount of cash within a short span of time.
Read This Section No Matter What!
Something that is very important to us is to ensure you do not use reward programs to your disadvantage. These programs should not entice you to spend more to gain the rewards. In reality, these programs should only be used as a supplement to spending you already have planned. If you are spending more to redeem more points, that would not only be totally counter productive, it would be putting you in debt (towards yourself or your bank) for things you questionably need. Be a smart consumer and ask yourself if you really needed the items before purchasing them.
“These programs should only be used as a supplement to spending you already have planned.”
Choosing The Best Reward or Discount Program for Your Needs
Some reward and discount programs are pretty pointless, as they have minimal, if any benefits, to offer. There are lots of poor quality reward programs out there, such as those that give you a token product after you buy a product you actually need. Others give you very little return on your spending.
Examples of Popular Reward and Discount Programs
- Sephora Beauty Insider: “Sephora’s Beauty Insider loyalty program has fewer members than Ulta’s Ultamate Rewards program, but it is growing faster. Beauty Insider membership is forecast to grow by 47% between 2016 and the end of the company’s 2018 fiscal year, from 17 million to 25 million. Ultamate Rewards membership has grown by 28% since 2016, from 23.4 million to 30 million.” (Source).
- Starbucks Rewards: Starbucks Rewards offers you points that they call “stars.” You get 2 stars per Dollar spent. With enough stars, you can “get free food, drinks & more”, “free brewed coffee & tea refills” and “exclusive offers, personalized for you.” If you love Starbucks coffee and go there regularly for yourself, or your colleagues, then check it out. (Source).
- Amazon Prime: Amazon Prime is one of the most popular and lucrative reward programs around, as it can be applied to literally millions of useful items and includes shopping and entertainment benefits. (Source) Amazon Prime provides “fast, free and convenient ways to get millions of items, from unlimited two-day shipping to same-day and 2-hour delivery in select areas.” Other benefits include:
- 20% savings on diapers and baby food subscriptions for prime members
- Free access to thousands of books, magazines, comics, Kindle Singles, and more
- Uber Rewards: Uber’s reward program offers a point for every eligible dollar you spend on rides and Uber Eats, and earn $5 Uber Cash for every 500 points. Plus, get 2x points on UberX, and 3x points for Uber Black trips” (See terms and conditions here)
- RBC & WestJet: Open to Canadians, RBC and WestJet teamed up to offer Ampli, a program that provides “members with merchant offers, flexible rewards and exclusive bonuses. In addition, members who spend on RBC cards and fly with WestJet will further amplify their rewards.” (Source)
Check out this awesome list of 53 Best Customer Rewards Programs for more ideas (opens in new window). From fast food restaurants to pharmacies, these are the most recommended store rewards programs around. They offer freebies, coupons, and other perks!
Avoid Useless Reward Programs!
There is no need to sign up for a program that you won’t actually use, or that gives you branded items that are useless or that you can’t sell. If you don’t go to Starbucks, don’t sign up for their program! The best programs give you actual cash or discounts on things you actually use or need. Great programs will give you points, which you can turn into cash or useful rewards. At the very least, you should use a reward or a discount program that gives you financial benefits that you can use in a multiplicity of ways, including allowing you to redeem them for cash.
Also, stay away from programs that put excessive demands on you as a consumer. The last thing you need is a reward program that forces you to change your purchasing behavior in order to start reaping the benefits. Remember, the idea here is to create a passive income stream, and having to make extra effort goes against that. Otherwise, to make good money off these programs, you also need to make sure you take them seriously by trying to find the best programs for your needs, may that be for travel, food, finance and so forth.
Signing Up to The Best Programs for You
To sign up for a rewards or discount programs. You will have to give some details about yourself to sign up. Basically, this includes your name, address and so forth (depending on the program). In exchange for this information, you will usually get a card, or have to use an app to accumulate points.
Now that you have signed up for your choice rewards program, you can start spending to start getting the points, discounts, or cash. Don’t buy more than you have to. However, you will notice you might be inclined to continue going to a particular business to ensure that you increase your rewards.
Just have to go about your life as you normally would. Buying gas when you need to, taking flights as you normally would, and using your credit card to shop as you typically do. You also have to be patient since the points need to accumulate over time before they can be redeemed.
Redeem Your Rewards
Once you have accumulated enough points, and have reached the required minimum, you can now go ahead and redeem them. In some cases, you will redeem the points for actual cash. However, there will be cases where you will only get a chance to buy a product using the points. As long as you get something you actually wanted, that should not be too big of an issue for you. You can easily save or redeem upward $100 over a year by joining a couple reward programs.
How Passive Are Reward or Discount Programs?
Earning money through customer reward and discount programs is very passive. You literally don’t have to do much after you sign for these programs. For instance, if your airline is giving you frequent flyer miles, all you have to do is sign up, and as you use their services as you usually would. But now you can enjoy the benefits that come from being part of the program. So, earning through a reward or discount program is very passive.
Unless you decide to join VIP customer reward programs, you generally don’t have to spend a dime to join any of these programs. All you have to do is express an interest in a particular program and sign up and you can start enjoying the benefits while going about your normal life. You will have to spend money, yes, but it should not be any money you never planned on spending before joining the program. Do be careful however, some require a paid subscription (usually yearly). Make sure to read the terms and conditions carefully before signing up.
Making a passive income through a reward or discount program is one of the easiest things you can do. You do not have to create any products or services, or spend too much of your time on it. Unless you don’t meet the criteria to join the program, the chances you don’t get accepted are low. Few obstacles stand in the way of someone trying to make some extra cash using a customer reward or discount program.
Few passive income methods offer instant rewards like customer reward and discount programs do. For instance, as soon as you sign up for a cash-back program, you can start getting the cash discounts as soon as you make a purchase. Therefore, as soon as you sign up, the income stream will already be up and running, and it can start giving you financial benefits right away.
There are a couple of risks you have to look out for when you set out to use customer reward and discount programs to make some cash. First of all, understand that you have to spend to earn. Be attentive to your spending and do not change your habits, that would be very counterproductive. Secondly, the points you get as rewards may end up being nearly worthless if you pick the wrong program. Join programs for businesses you already buy from. Some reward program points also expire, which is a technique businesses use to ensure that you use them as soon as possible. This makes this passive income method a pretty risky way to earn a passive income. Therefore, make sure to read the policies of the programs you are signing up for and be sure you actually agree with them!
Seasons are not really an issue with customer reward or discount programs. You can earn money throughout the year. In any case, you probably use your card for most of your purchases, and you keep doing that all year around. That means that the program will keep you making some cash or points that you can turn into actual rewards throughout the year. And it’s not like the discount or rewards programs get suspended or put on hold at certain times of the year.
ROI (Return On Investment)
A customer reward or discount program may not be the most profitable passive income ideas in existence. But it can still make or save you some cash, and that’s what’s important. Therefore, you should expect an average return on your investment with this passive income method. It is still worth a try, as it does not cost much money or time.
Who has the best loyalty rewards program? Some of the best customer loyalty rewards programs are run by Starbucks, Amazon, Target, Bed Bath & Beyond, Barnes & Noble, Toms, The North Face, Virgin Atlantic, and Uber.
Are Loyalty and Rewards Programs Passive Income? Customer and reward programs can provide passive income if you sign up to programs you will actually use and that do not change your purchasing habits. Otherwise these programs may entice people to spend more, which would be counterproductive.