Like everyone, I don't like paying more for a purchase than I really need to. With the growth in online shopping we are now able to take advantage of much lower prices driven by competitor pressure between the vast selection of retailers and the lower overheads base they cover. Together with the advent of various price comparison search engines like Google Shopping, Kelkoo and Price Runner, searching for the cheapest product online is now a simple and stress free process. So with everything at your fingertips, your purchasing decision is generally influenced by product cost, postage rates and retailer...
... not any more! There is a now a new factor to consider; whether or not there is a cashback incentive associated with the retailer. This article aims to give an insight into the benefits of cashback shopping, with particular reference to how I saved 23% on my annual home insurance premium.
I was first introduced to the concept of cashback shopping 12 months ago and during that time I've earned £400 in money back on products purchased online without drastically changing my shopping behaviour. The concept of cashback shopping has been around for a couple of years and can be quite a difficult concept to grasp however, in a nutshell, retailers will give you money back or a percentage off your purchase for buying your products from their website. This works by using affiliate schemes where retailers offer a payment incentive for 3rd party companies to drive customers to shop on their website. Examples of these 3rd party websites are MoneySupermarket.com, Confused.com, dooyoo.co.uk and BizRate UK which offer product comparisons and are paid by the retailer for any sales that are made when customers click through to their site.
To our benefit as customers, there are now companies such as Quidco, TopCashback, Cashback Kings and WePromiseTo who act as these 3rd party companies on our behalf and pass all or some of the marketing incentives on to us, all that is required is to create an account with any of these companies and click through their website to the selected retailer prior to making an online purchase.
The most beneficial products you can earn cashback on are generally offered by retailers who feel they can tie you into a deal for a period of time and retain your custom, such as insurance or financial packages. There are huge incentive payments offered by insurance companies to encourage 3rd parties to drive customers to their site. And it is the size of these payments that we, as customers, can now use to ensure we get the best product for as little cost as possible.
Earlier this year, I received my Home and Contents Insurance policy renewal price of around £500 a year, which was comparable with the previous years cost. However, I felt I should shop around and see if if I could get a better deal elsewhere. In order to assist me, I read an article on how I could quickly compare home insurance quotes from a large proportion of online insurance companies on the Money Saving Expert website. This showed me that I could use the four main search comparison sites (Confused, MoneySupermarket, CompareTheMarket and GoCompare) in a particular order and allow me to submit my details to a host of brokers and insurers without filling out large quantities of quote forms.
Having short listed a few of the cheapest quotes from AA (£271), CIS (£305) and Halifax (£215), my next port of call was to use the Cashback Guardian to determine which of these companies offer cashback and if so, how much. The Cashback Guardian is a toolbar you can download from Cashback Guide and alerts you of the best cashback offers available from over 35 cashback sites when you navigate to a website that offers cashback. Only two of my short listed companies offered cashback; CIS with £70 and Halifax with £55. So I discounted the AA quote as both CIS and Halifax worked out considerably cheaper with the cashback deducted. I ultimately decided on the CIS policy because it was a more comprehensive policy and at £245 (net of cashback) was over half of my renewal quote.
The next stage was to purchase the policy online and claim my cashback. This process simply involved creating an account with the cashback site that was offering £70, in this case Quidco. I then searched for CIS (listed as Co-operative Home Insurance on their site) in their search engine and followed the link to the Co-operative Home Insurance page detailing information about the retailer. From there I followed the link to visit the merchant and earn cashback which took me to the CIS home page. I was now in a position to fill out an online quote and make my purchase as I would have done normally.
Because I clicked through to the CIS site from Quidco, Quidco will now have a record of me making a purchase through the CIS website and will update my account within 48hrs to inform me that I have made a transaction and display the amount of cashback I have earned. The thing to remember with cashback is that the time between making a purchase and receiving your money can be anything up to 3 months. This is usually down to the retailer validating your transaction before paying the cashback site the incentive payment. However, once you're up and running and start to regularly use cashback sites as part of your online shopping, you soon build up a regular monthly payout via a bank transfer (BACS), Cheque or PayPal.
Now I've started to use cashback websites for purchasing all my purchases online where cashback is offered. So far, I've had money back on train tickets, tumble dryers, computer games, hotels, music and dvds, car hire and most recently baby products. All this adds up over time and I've certainly found it very rewarding just by introducing an extra step when buying online.