In the second episode of The Partner Marketing Podcast, host Matthias Stadelmeyer welcomes Torsten Hautmann, VP of Digital Sales at PAYBACK. Together, they explore how PAYBACK has grown to be the largest loyalty community in Europe with over 30 million subscribers and the significant role that Partner Marketing has played in this success story, setting the stage for an in-depth discussion on the strategies and insights that have driven PAYBACK's success.
Introducing Torsten and PAYBACK
Matthias: "In today's episode, Torsten Hautmann, VP Digital Sales at Payback, will share insights into how Partner Marketing creates success. Welcome to the Partner Marketing Podcast, Torsten. It's great to have you here today. You are VP Digital Sales at PAYBACK. What does a VP Digital Sales at Payback do?"
Torsten: "Hi, Matthias. Thank you for having me. 'm responsible for the whole digital partner management at PAYBACK, which consists of three pillars. The first pillar is our official partnership business, which involves direct collaborations with companies that integrate PAYBACK's loyalty scheme. The second pillar is our whole rewards business, which is the place where our members redeem their points and get a great voucher or a physical good as a reward. And the third part is our affiliation business, our partnership business."
Torsten continues explaining that PAYBACK is the largest loyalty program in Germany and has been operating for 25 years. With 32 million active members, the program has achieved significant penetration, with nearly every household in Germany owning at least one PAYBACK card. Over the years, PAYBACK has distributed approximately 70 to 75 million cards, demonstrating its ubiquity and strong market presence.
PAYBACK has a robust online and mobile presence, with approximately 12 million app users and a similar number of subscribers reached through newsletters. Torsten shares that daily activity on the PAYBACK app is particularly noteworthy, with up to 1.8 million unique users logging in daily. This high frequency of engagement underscores the program's relevance in the lives of its users. Torsten attributes this to the program's seamless integration into both offline and online shopping experiences, making PAYBACK an indispensable part of its customers' daily routines.
Matthias: "I think it's fair to say that PAYBACK is the largest shopper community in Europe, I would say, isn't it?"
Torsten: "I don't know if it's the largest, but for sure, it's one of the largest. Our reach is quite impressive, but what impresses me even more is the daily activity of our members. So, if you look into the PAYBACK app, and basically, that's where the action happens, we have up to 1.8 million daily unique users. And that's the impressive combination of a good reach and a high frequency. So, the program is highly attractive and useful in daily usage."
How does PAYBACK’s business model work?
The discussion between Matthias and Torsten moves to PAYBACK’s multifaceted business model, which has evolved from a traditional loyalty program focused on offline retailers to a comprehensive platform that spans both offline and online commerce.
The company’s revenue model can be categorized into several key areas:
Offline Loyalty Programs: PAYBACK started by partnering with grocery stores, supermarkets, and fuel stations to create loyalty schemes. These partnerships remain the cornerstone of the company’s success, as they provide a steady base of engaged customers.
Digital Partnerships: In the digital space, PAYBACK works with 25–30 official online partners who use the platform to drive customer loyalty. These partnerships are the online equivalent of PAYBACK’s offline collaborations.
Affiliation Business: PAYBACK also uses affiliate marketing to promote offers from a wide array of partners. This model enables the company to bring smaller and less integrated partners into the ecosystem, offering customers more options.
Marketing Platform Services: The company sends out a personalized monthly points statement to 18 million customers. This service highlights the breadth of the PAYBACK platform, as it combines both digital and offline outreach to maintain high levels of engagement.
Torsten explains that the combination of these models allows PAYBACK to operate as one of Germany’s largest marketing platforms, capable of reaching customers through various channels and touchpoints.
What roles does Partner Marketing play in PAYBACK’s Growth?
Torsten: "Partner Marketing has played a big role, a very important role in helping us build a large shopper community. It gave PAYBACK the possibility and the opportunity to build up interesting offers from interesting partners to its community, and this alongside with the official partnerships which are, of course, a little bit more complex than an affiliation partnership."
Through its affiliate marketing model, PAYBACK has been able to offer a wide range of deals and promotions to its customers, supplementing the more resource-intensive official partnerships. Affiliate marketing allows PAYBACK to collaborate with hundreds of businesses without requiring them to implement complex loyalty systems. This flexibility has enabled the company to create an attractive ecosystem of offers, which in turn has strengthened customer loyalty and increased engagement.
Torsten notes that official partnerships, while valuable, require significant time and resources to establish. In contrast, affiliate partnerships are easier to set up and allow PAYBACK to test new partners and offers quickly. If a partnership proves successful, it can be scaled further; if it does not, it can be discontinued with minimal risk. This agility is one of the key strengths of PAYBACK’s Partner Marketing strategy.
Balancing exclusivity and variety in partnerships
PAYBACK’s approach to partnerships strikes a balance between exclusivity and variety. In certain industries, such as grocery retail and fuel, PAYBACK maintains exclusive partnerships to ensure a competitive edge. However, in other sectors like travel and fashion, the company has opted for a more open model that includes multiple partners. This approach allows PAYBACK to cater to a broader range of customer needs.
Torsten explains that the ultimate goal of PAYBACK’s partner portfolio is to offer a comprehensive range of products and services. Whether customers are looking to book a vacation, purchase electronics, or even install solar panels, PAYBACK aims to provide an option that is incentivized with loyalty points. This broad offering ensures that customers can use PAYBACK for virtually any transaction, enhancing the program’s appeal and stickiness.
Torsten: "We still have exclusive partnerships, especially in the grocery and fuel segment, but we also have a lot of industry categories, which we call verticals, where we decided that we have to offer a variety of partners. If you're looking at travel or retail and fashion, of course, it doesn't make sense just to offer one partner in an exclusive deal. In the sense of offering a broad ecosystem and a wide variety of partners to shop at, it makes absolute sense to open up the vertical and try to acquire the most important partners in this vertical."
PAYBACK’s technical infrastructure and point management
The PAYBACK loyalty system is designed to be simple and transparent. Customers earn points at a base rate of 1 point per €2 spent, with each point equivalent to €0.01. Additional points can be earned through promotional offers and coupons, which multiply the base rate. Torsten describes how PAYBACK’s technical infrastructure ensures accurate and timely allocation of points, even for large-scale campaigns involving multiple partners.
For official partnerships, PAYBACK handles the calculation and clearance of points on behalf of its partners. This centralized system is a significant advantage, as it reduces the technical burden on partners and ensures a consistent experience for customers. Torsten highlights the importance of reliability in loyalty programs, noting that delays or errors in point allocation can damage customer trust.
Torsten: "In the partnership models and in most of the official partner models, we do the calculation on our side. I think that's also a big advantage for our partner because our system at PAYBACK is proven and works as it should. That's actually a big point; if you are doing a loyalty scheme, it has to work. If customers experience point collecting that is not working properly, and where points are coming late or not as expected, then you might have a problem with establishing and providing a good loyalty program. "
Matthias: "What would you say about how many Brands you work with?"
Torsten: "I think it's about 650 right now. In most verticals, we are not exclusive, but we are very sensitive about the partners we work with. Why are we so sensitive? Because basically, every partner we work with and every offer we provide is PAYBACK-approved. Our customers out there, our members, can trust 100% that if we send out an offer if we do a coupon, they can buy there without thinking about it because we've done the thinking about 650 trustful partners. It would be no problem to offer 10,000 partners, but we decided to offer a hand-selected number of partners and offers."
The power of Partner Marketing in scaling businesses
Affiliate marketing has been instrumental in scaling PAYBACK’s operations. Torsten praises the flexibility of the model, which allows the company to onboard new partners quickly and test their performance. Unlike official partnerships, which can take months or even years to establish, affiliate partnerships can be set up in a matter of days or weeks. This speed and scalability make affiliate marketing a valuable tool for expanding PAYBACK’s reach.
Torsten: "You know, what I always loved about Partner Marketing is the high flexibility in this model. Basically, you can decide to test a new partner, show it to your audience and customers, and just try out if it works. And if it works, we're fine; we can scale from there, and we can have a look into deepening the partner model, deepening the relationship, deepening the media we show on the platform."
Torsten also underscores the transparency of affiliate marketing, which provides real-time data on sales, clicks, and other performance metrics. This high level of visibility enables PAYBACK to optimize campaigns and make data-driven decisions.
Current challenges in Partner Marketing
Torsten discusses the challenges associated with tracking and consent management, particularly in the context of app-based commerce. As one of the first loyalty programs to adopt an app-only model, PAYBACK faced initial difficulties in ensuring accurate tracking and compliance with privacy regulations. Over time, the company has developed robust solutions to address these issues, but challenges remain, particularly in securing cooperation from partners.
Torsten advocates for industry-wide standards to ensure 100% tracking accuracy. He believes that networks and Brands have a responsibility to guarantee seamless tracking, as it forms the foundation of successful partnerships. While PAYBACK has the market power to enforce these standards with its partners, smaller Publishers may struggle to achieve similar compliance.
Evolution of Partner Marketing & future trends
Reflecting on his 20-year career in Partner Marketing, Torsten describes how the industry has evolved from simple newsletter campaigns to complex, multi-channel strategies. Today, Partner Marketing involves advanced tracking systems, attribution models, and personalized customer journeys. Despite its increased complexity, Torsten believes that Partner Marketing remains a highly effective and transparent channel for driving business growth.
PAYBACK’s success exemplifies this evolution, with the company generating nearly €6 billion in annual e-commerce revenue. Torsten attributes this growth to the scalability and adaptability of Partner Marketing, which allows PAYBACK to cater to both small businesses and major Brands like Amazon.
Looking ahead, Torsten predicts that personalization and one-to-one relationships with Brands will play an increasingly important role in Partner Marketing. He encourages marketers to approach challenges with openness and collaboration, as these qualities are essential for fostering successful partnerships.
Learn more about the industry and how PAYBACK scales its business with Partner Marketing – listen to the entire episode on Spotify, Apple Podcasts, our website, or all other podcast platforms.
About The Partner Marketing Podcast
The podcast brings together thought leaders and professionals from across the globe. In each episode, our host, Matthias, sits down with guests to discuss the evolving world of Partner Marketing and share personal stories.
For more details, please visit www.tradedoubler.com/podcast
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