Promotional Guidance

A Crash Course in Cashback Promotions

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Cashback campaigns. Why its loved by many, but not so easy to master

Cashback promotions are one of the most recognised promotional mechanisms out there – ask any high-street shopper or business procurement department what a promotion means to them and there’s a high chance they will mention cashback.

Offering cashback provides tangible benefits to shoppers by giving them a percentage of their purchase price back, essentially reducing the overall cost of the transaction. For businesses, cashback promotions serve as a powerful marketing tool to attract customers, incentivize purchases, and foster loyalty.

The appeal of cashback promotions lies in their simplicity and transparency. Unlike other promotional strategies that may involve complex terms or restrictions, cashback offers are straightforward: make a purchase, and get a percentage of the purchase amount refunded back. This simplicity makes cashback promotions easy to understand and attractive to a wide range of consumers.

By simply offering the consumer the chance to claim a pre-determined amount of money after purchasing the promotional product, this mechanism ensures brands don’t have to discount their products; thereby ensuring they are not undervaluing their proposition, whilst still providing a financial incentive to their consumers.

As with all mechanics, cashback promotions still have their pro’s and con’s. Read on to understand how cashback can work hard for you, and whether they’re suitable for your brand and promotion.

Our key take outs and watch-outs

  • Cashback promotions are a tried and tested model that have repeatedly proved their value in the promotional marketing toolkit. Cashbacks are understood and accessible to all audience types, from young children to mature adults, and the mechanism can be applied to almost all markets.
  • Cash is a universal reward that is recognised and loved by all audiences. In our recently published white paper ‘What Brits want from Promotions 2.0’ we found that for XX% of consumers money is their preferred reward.
  • Consumers claiming cashback are required to provide data in order for the claim to be processed. This is a great opportunity to collect first party data and expand your customer database. It’s also a great opportunity to ask some additional questions to dig a little deeper into the views of your consumers – what drove their purchasing decision? Have they purchased your product before? What are their views on price point etc. Asking a few more questions will give you valuable insight to continually improve your proposition and better resonate with your consumers.
  • Discounting and constant price promotions will likely devalue a brand. The beauty of a cashback is that, unlike a flat discount on the product which will result in a lower basket spend and a lower average selling price, a cashback promotion protects your selling price, whilst also driving sales uplifts and rewarding your consumers.
  • Setting time limits on the cashback period will increase urgency and give consumers a reason to buy now!
  • Cashback communication if focussed solely on your brand with no dilution of messaging due to brand partners or other prizes being associated with your campaign. The strength of offer and value you are giving back to your consumer will only be associated with your brand, building the consumer’s perception in a positive way.
  • Cashback campaigns can suit all budgets. Reward value, route of entry and time period to claim can all be tailored to suit budget, large and small. When planning a campaign, know what your key objectives are and ask you risk provider to model various scenarios so you can see the impact of each amend.

Watch-outs

  • The mechanic is well known and loved, so in order to stand out from the crowd your promotional communication needs to be strong and eye-catching to cut through the crowd. For best results, ensure you have on pack communication, an enticing cashback offer, eye-catching POS display and a strong call to action in your messaging.
  • Cashback values need to be set carefully to ensure that the campaign is hitting all financial KPIs and objectives. A cashback value that’s too low will not have the sales driver impact desired, whereas a cashback value too high will bust marketing budgets with the risk of a higher redemption rate than expected. Stress testing scenarios and finding the sweet spot all departments will be comfortable with is time well spent.
  • This is one of the harder mechanisms to calculate redemption rates for, due to fast our changing economic climate… however, it is not impossible. Make sure you work with a sales promotion agency, who can use their vast database of industry knowledge to provide you with up-to-date and realistic promotional information.

Overall, cashback promotions have proven to be an effective and popular promotional mechanism, driving sales, enhancing customer satisfaction, and strengthening brand loyalty. As such, they continue to be a prominent feature in the marketing strategies of many businesses and are likely to remain a staple in the promotional landscape for the foreseeable future.

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Promotional Guidance

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