What is a Cashback Promotion and How Does it Work?
Everyone likes discounts because having extra money in your pocket is always appealing. In fact, according to research conducted by Forbes, 82% of customers said they would prioritise cashback, discounts, or special promotions when choosing where they will shop.
However, a lot of discounts can affect consumers’ perception of your brand and might result in lowering its value. To prevent this, businesses must take a more strategic way to offer different types of promotions to the consumers.
A cashback promotion is one of the best strategic ways that can have a huge positive impact on your market share, customer loyalty, and sales. Cashback is popular with customers because it rewards loyal consumers and attract new consumers to purchase your products.
Cashback is usually a specific percentage of the money spent by the consumer and the retailer pays it back to the customer for each qualifying purchase. The amount a customer gets back depends on the terms and conditions of a specific promotion.
A cashback campaign has a specific validity period when customers must have purchased the product to avail of the cashback offer. The retailer can also limit the number of times a consumer can be rewarded during the promo period.
Benefits of Cashback Promotions
Research conducted by The Center for Generational Kinetics found that businesses that offer Gen Z and millennial customers at least 5% cashback will result in greater sales impact. Also, more businesses see increased sales through rewards like cashback compared to discounts.
Now that we’ve explained a cashback promotion in detail, let’s now move on to the reasons why so many businesses choose to implement cashback campaigns into their marketing strategy.
1. Increase Brand Awareness
Brand awareness is the main building element of brand loyalty. It can have a huge effect on customer behaviour and can highly influence purchase behaviour.
Through cashback promotion, your brand gets more exposure because of an attractive offer. Also, the brand’s value isn’t affected because the price point is still the same and is in line with your competitors.
2. Attract Consumers to Switch to Your Brand
Cashback promotions help your brand be ahead of your competitors, get new consumers, and get immediate sales from the added value you can give to them. A cashback incentive builds the temptation for consumers to make the switch from a brand with which they are familiar.
Your cashback offer could be a major factor for a consumer when choosing between your brand and your competitor, even if they often purchase that other brand.
3. Access to More Consumer Data
Customers must give detailed information when redeeming cashback from their purchases.. This data is an important part of the cashback process such as payment details, proof of purchase, location, etc.
More questions can be asked to consumers to have deeper insights into the consumer’s experience with your brand. This data can be useful in planning future promotions and improving customer relationship management.
Strategic questions can help refine consumer profiles and give you insights into your consumers. The questions you ask your consumers can help you analyse important trends and use them to improve your proposition.
4. Increase Profit While Keeping Prices At The Original Level
Cashback promotion is good for merchants because it helps them maintain prices at the original level. This type of promotion results in more profit than a traditional discount promotion.
Cashback promotion is also good for brands that want to compete other than price and keep their value proposition.
A cashback promotion is simple, and easy for consumers to engage with. This type of promotion is also scalable and is a better alternative to traditional discount promotions.
Cashback promotions also provide a huge opportunity to drive traffic to a brand’s website and increase sales while rewarding customers. This can also help the brand have a higher return on investment in promotional campaigns above point-of-sale discount.
If you’d like more information about our cashback rewards platform, please feel free to reach out to PokitPal today. We can work together to develop a plan for your brand that works to increase your sales and customer loyalty through customer rewards.
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