Even though it’s still in its primitive form, online cashback rewards are gaining popularity lately. More number of business organizations are investing in customer loyalty rewards solution, cashback promotions and gaining momentum in effectively engaging their audience.
For any business, it’s easy to take the traditional route and offer discount promotions. Even though offering discounts is a safe bet, it doesn’t always lead to the desired outcome.
As per the industry experts, discount offers are no longer the best way to promote a brand, and its effectiveness as a marketing tactic has dwindled.
Well, discounts and price promotions have been overused by companies, so much that they might be killing the brands.
So if you’re struggling to find an alternative for discount coupons, switch to cashback promotions and monetary rewards solution that work.
What makes cashback rewards better than discount incentives?
Cashback rewards remain the most dominant customer reward program, with 64% of consumers preferring cashback rewards more than other bonuses.
Let’s compare why cashback rewards are more effective customer rewards solution than discounts in the modern-day scenario:
- When a brand overly uses discount promotions, the customers become aware and make purchases only during the “discount” period. They start buying in large quantities so that they have enough supply until the next sale.
- With time, the customers become more focused on the price than other product differentiators, changing their selection criteria towards cost benefits rather than an emotional attachment to the brand.
- And when such customers get lower prices elsewhere, they readily switch brands.
- Unlike coupons and points that quickly expire when un-redeemed, cashback reward benefits are instantaneous.
So what does this mean for your business?
By selling products at a lower price throughout the year and offering more discounts to lure customers away from your competition, you will see your profit margins shrink considerably, hurting your market share.
It will also lead your brand to lose its credibility, and eventually, your customers will develop a gloomy outlook for your brand.
While cashback rewards can drive and increase sales, they only target your loyal customers who are not looking for cheaper products.
The more money your consumers will spend, the bigger the cashback rewards they will get. This way, you’re not insisting your customers to purchase from you, but only rewarding those who support your brand.
Eight reasons why customers prefer cashback rewards or monetary incentives
It’s hard to interpret a customer’s mind when they are making a purchasing decision.
Cashbacks and monetary incentives are a great way to engage your audience; here are eight reasons why customers prefer them over other incentives:
The primary reason for the popularity of cashback rewards and other monetary incentives is that it allows customers to save money.
For instance, when the customers get 5 – 10% cashback on a purchase, they can buy additional items with the saved money. It makes them feel satisfied and content.
The world is going mobile
With the advent of mobile technologies like Apple Pay and Android Pay, consumers are becoming more oriented towards making payments and earning rewards through their smartphones only.
According to Forrester’s report, 44% of the respondents want to see special offers directly in their mobile wallets. At the same time, 64% believe that loyalty programs operating directly on mobile phones are the most effective.
With the growing popularity of mobile money payments, some customers don’t have a bank account but use Apple Pay, PayPal, and other similar mobile apps to handle online financial transactions.
Such users find it easy to use a cashback in their digital wallet to recharge their phones, pay bills, etc.
Tip: You can also use smartphone notifications to remind your customers if they have not picked their cashback reward.
Convenient and user-friendly
Cashback rewards are easily accessible and understood by all audience types – from young to mature; everyone can readily avail of cashback bonuses without dwelling into complicated terms and conditions.
Moreover, the cashback mechanism can be implemented across several industries, making it a highly convenient option for online retail stores and platforms.
More efficient and cost-effective for the customers
Cashback rewards provide a more efficient and cost-effective solution to customers than any other incentive.
Some discount coupons are only applicable to the next purchase, while with cashback rewards, customers get benefits almost immediately into their mobile wallets, making it an efficient reward type.
Tip: By strategizing a loyalty program to include cashbacks, you can enable customers to shop more from your brand.
Digital wallets offer additional cashback on financial transactions
When using digital wallets for online transactions, customers have a chance of winning a cashback on every transaction.
For instance, if there’s a primary discount on a product in an e-commerce store, digital wallets provide a secondary bonus in the form of a cashback reward in addition to the original offer.
Thus, allowing customers to save more on the total amount they spend.
Provides a variety of purchase options
With many e-commerce platforms offering cashback offers, customers have many options to choose and select the highest saving offer – allowing them to make a wise purchasing decision.
Apart from regular markets, there are special holiday discounts that offer a surge of cashback offers. Many fashion portals, gadget websites, home decor, and automobile companies provide extra cashback bonuses along with a discount.
Empowers the consumers
Cashback rewards allow customers to enable brand activation in a cost-prudent way. While discounts operate in spurts, cashbacks have consistency in terms of traction.
It allows the consumers to experiment with new brands and products, selecting the best in terms of quality and value for money. By having the power to choose the appropriate product, customers feel empowered and satisfied.
Builds an emotional connection with your customers
More than any other bonus, providing cashback to consumers provides value to their purchase.
It makes them feel appreciated, and people like to re-purchase from a brand that offers them satisfaction and acknowledgment.
With a strong emotional connection, consumers also become brand ambassadors and ask others to buy from a particular brand.
How NextBee helps?
NextBee provides a robust cashback program that drives sales by building varied commission structures and automated payouts.
The program can engage your customers to advocate sales through cashback rewards and other monetary incentives.
NextBee also specializes in developing a personalized customer loyalty program with a wide gamut of features, providing a 100% scalable solution to any business requirements.
Every major brand is using cashback rewards and other monetary incentives to woo their customers. By understanding the psychology behind the popularity of special offers, businesses can create a favorable brand image to delight their new and returning customers.