As you may know by now, 'Cashback' is a type of promotion that allows the customer to earn money back on their purchases.
As a business owner, you can run the promotion as a loyalty programme, where your customers can sign up to the scheme and begin to receive a sum of money directly back to their bank accounts (or into a Cashback 'account' in the case of joining a Cashback network) every time they make a purchase at your store or affiliated stores.
The sum is usually calculated as a percentage of the total purchase amount. For example, 10% cashback on a £50 purchase of sneakers means the customer will receive £5 back.
Customers LOVE cashback schemes, and it shows.
The size of the global cashback industry is estimated to be greater than $108 billion. Nearly 20% of consumers said they made a purchase or increased the purchase value because of a cashback offer.
And merchants benefit from a clear competitive advantage and a radical increase in Customer Lifetime Value – the most important aspect of a good business growth strategy in the modern era and especially during a recession or a pandemic.
We think running some form of Cashback campaign is a no-brainer.
But if you need some more convincing, here are the top three reasons your business could benefit.
We love Cashback so much that it was difficult to pick just three… but fortunately, they are convincing enough on their own.
Let's dive in.
Reason #1 – The Loyalty Ladder
The Loyalty Ladder is a business concept that lays out the ideal trajectory of loyalty among a store's customers.
At the lowest level, you have a 'prospect' – these are people who haven't yet purchased anything from your store but are amongst your target audience.
At the highest level, you have 'advocates'. These are the people who have not only bought your product but are such fans of what you offer that they refuse to shop anywhere else. They even promote your store to their friends and family!
Advocates are the name of the game in 2020. Compared to your lower-level customers, the value they provide tends to follow the 80/20 principle – where 80% of your revenue is derived from this loyal 20 % of your customers.
And what's a tried-and-true method for nudging a prospect to a customer and a customer to an advocate? A foolproof loyalty initiative like a Cashback campaign.
Providing a clear incentive to your first-time or repeat customers for doing business with you is a sure-fire way to gain loyalty and climb the ladder. This will continue to increase each of your customers' value. And if all goes well, getting free marketing from advocates in the form of positive word-of-mouth.
Reason #2 – Competitive Advantage
2020 is simultaneously the best and the worst time to be in business as a merchant.
It's the best because entry barriers are extremely low. With the internet and digital technology, it easier than ever to set up a presence for your store and find a thriving market in no time.
Which, on the flip side, means competition has never been so fierce.
Finding ways to distinguish yourself in the market in more dimensions than just product quality or superior marketing and branding is essential to get noticed by potential customers.
And a proven way of doing this is by running loyalty initiatives like Cashback campaigns.
Cashback campaigns are still a relatively underutilised strategy because the benefits of Cashback are under-reported. There is also a false perception that creating and running a cashback campaign is complicated or expensive.
And neither of those things are true! (…but more on that later).
So, by offering Cashback to customers, you give them a reason to choose your business over your competition. While they don't receive a discount directly, they do indeed get one in the form of money returned after a transaction is made. Who wouldn't make that choice?
Which brings us to our last reason.
Reason #3 – Tough Times
We're living in tough times.
The virus and its effects on the global economy have been severe.
As disposable income continues to be depressed by the global situation, customers (probably including yourselves) do everything they can to maximise the value of each penny they spend.
People are desperate to get their essentials cheaper than usual. And the same applies to more recreational goods and services that they desire for much-needed stress-relief and distraction.
But they continue to be restrained by limited cash and an uncertain future.
There has never been so much attention around financial tips and tricks discussed in internet forums, podcasts, and books, and there's one thing that comes up perhaps more than anything else – advising people to search for high-value Cashback promotions.
It's no secret that Cashback saves the customer money (and, counter-intuitively, maximises merchant revenue by increasing repeat purchases). Whereas before you need to find ways to promote your Cashback scheme to your customers, now people are actively searching them out.
You have a unique opportunity to save your loyal customers money at a tough economic point in their lives, whilst ensuring your own operation's longevity for years to come with lifetime customers.
As we said earlier – it's a no-brainer. But it is even more clear at a time like this.
How to Start Your Cashback Campaign
We hinted earlier about a new way in which to start Cashback campaigns that is both simple and inexpensive.
Well, here it is.
The quickest route to a truly effective Cashback Campaign is joining the OMG network.
We've been busy developing a platform that enables business owners to create, manage, and promote their cashback campaigns with ease.
And by ease, we mean for free, without any new hardware, and with just a few clicks.
We made doing this accessible for businesses of all sizes, from startups to internationally recognisable brands.
The best part is that we have an active network of discount-savvy hyper-local customers searching for their next favourite establishment.
And there are plenty of ways to track and monitor your existing most loyal customers to give them even more value and keep them coming back.
To find out more, visit our partners' page, sign up, and a member of our team will get in touch to get you started.