We are all familiar with the idea of discounts – picking up the same washing detergent you buy week in, week out, and wondering whether to go with it or the competitor brand that is offering 30% off. As many savvy consumers know, it does pay to shop around, and let’s be honest, the idea of extra money in your back pocket is always enticing. In fact, according to recent research conducted by Forbes, 82% of consumers said they would prioritise special promotions, discounts or cashback when choosing where they shop, and surveys done by RetailMeNot found that 48% of people will steer clear of brands that don’t offer deals.

There are many different approaches when it comes to giving a customer a discount but over the years, it has been proven that these types of ‘money off’ offers aren’t always the best way to promote a brand. In fact, too many discounts can affect product perception and result in a cheapening of your brand. So, to avoid this, it’s best to take a more strategic approach and to offer different kinds of promotions to the customer. For example, a cashback campaign is a tactic that can have a hugely positive impact on sales, market share, and customer loyalty.

But how does it work?

Why cashback campaigns are so successful

Well, the idea behind the promotion is simple but effective – a consumer purchases a promotional item and then claim back a percentage of what they paid.

Let’s examine it in further detail. Customers apply for a rebate post-purchase and once their submissions are valid and within the parameters set out in the terms and conditions, the cash is delivered back to them. There are many ways to grant the cashback to the customer such as a pre-paid branded card, bank or Revolut transfer, Google or Apple Pay e-wallet, and more.

Cashback promotions help your brand rise above the competition, win new customers and gain immediate sales from the added value you can deliver. Your offer could be the deciding factor for a customer choosing between your brand and another, even if they are inclined to be loyal to that other brand. Most importantly, if the consumer has a positive experience with your brand, it is a great opportunity for you to build on that relationship and encourage repeat business.

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Cashbacks prove popular with consumers for many reasons. They reward loyal customers and simultaneously entice new business. Current customers can continue to buy their brand of choice and receive a bonus for doing so. They add real value to a transaction and in fact, research conducted by The Center for Generational Kinetics found that brands that offer millennial and Gen Z consumers at least 5% instant cash back will see even greater sales impact now and, in the months, ahead, in fact, more companies see increased revenue via rewards like this (36%) compared to discounts (28%).

How cashback promotions can benefit your business

It’s not just the consumer that benefits. A cashback promotion brand gains a competitive edge by offering a financial incentive without the risk of devaluing its image. They give a great opportunity to increase revenue and drive traffic to a brand’s website, all the while rewarding customers. They will also deliver a strong return on investment in promotional campaigns above point-of-sale discount.

Although it is wise to budget for full compliance with a cashback program, a surprising proportion of customers do not get around to fulfilling the requirements needed to access their cashback. To be more precise, on average 30-45% of customers redeem their rebate, which enables brands to present bigger incentives in their promotions.

Another major advantage that a cashback promotion offers is that they can be run in any market, in any language, and with any currency. The promotion can build strong advocacy with a brand’s customer base, will complement other strategic objectives and the mechanic is suited to both the B2C and B2B market.

A cashback campaign also assists with collecting valuable customer data and paves the way for future marketing to a customer who is already engaged with the brand. Customers provide specific information when redeeming their cashback and further questions can be asked to probe deeper which can be very useful to direct future promotional efforts and customer relationship management.

In conclusion, a cashback promotion is a great way to improve brand loyalty and grow sales, while also providing an opportunity to collect valuable customer data. If you’re looking for a promotional campaign that will have a positive impact on your business, then consider running a cashback promotion.