One glaring obstacle in the present-day economy is how to monetize a digital audience — and make profit at the same time.
Luckily, there are plenty ways to do this; and one of which is cashback rewards. This type of marketing is effective because it incentivizes customers to spend more with your business — so when they win, you win too.
According to Statista, the “global cashback industry is expected to be worth more than $200bn a year by 2024, with statistics showing that 46 per cent of cashback participants consider it a vital step in their purchase decisions.”
In this article we walk through tips and best practices to increase profit with cashback rewards.
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What are cash back rewards?
In the simplest of terms, cash back rewards are a type of customer loyalty program. They reimburse a customer a certain percentage of their purchase, either in the form of cash or store credit. The percentage is set by the merchant, and is generally between 1-5%.
There are many ways to structure a cash back program.
For example, some businesses have a rotating bonus structure, where different products earn different percentages of cash back. Others have a tiered system, where customers earn more cash back the more they spend. And still others have a flat rate cash back percentage on all purchases.
However, it's best to incentivize customers for things they actually care about — like an additional adspend for media businesses.
9 useful tips to increase profit with cash back:
1. Get cash back on ad spend
To recoup some of your advertising costs, get cashback on adspend. It's a great way to incentivize customers to spend more with your business. You can set a percentage of cash back on all adspend, or you can tie it to specific marketing campaigns. Either way, this is a great way to increase your ROI. In fact if you are into media business, or run an ecommerce agency/brand — cashback on adspend can be a great addendum. You can use the cashback rewards as additional ad spend, use it to fund business travel or to pay supplier invoices.
2. Create a loyalty program
To increase customer retention and encourage customers to spend more with your business, loyalty program is a fantastic addendum. You can offer points, store credit, or cash back for every purchase. You can also offer bonus points for referrals, social media shares, and other actions. The important thing is to design a program that benefits both your business and your customers.
As rightly stated in a Forbes article, "People react to rewards in various ways. According to global consultancy McKinsey's research, these reactions entail context, habit, friendly influence, incentives, emotions, congruence, salience and other factors. It's a surefire way to engage someone's emotions, and in turn, gain or lose their loyalty."
3. Increase your margins
This is a great way to increase your profits without raising prices. By offering cash back rewards, you're essentially giving customers a discount on their purchase. This allows you to increase your margins without affecting your price point.
4. Run a promotion
This is a great way to jumpstart your cash back rewards program. You can offer a higher percentage of cash back for a limited time, or you can offer bonus points for certain actions. This is a great way to get customers excited about your program, and it can also help you boost your sales.
5. Partner with other businesses
This is a great way to increase your reach and grow your customer base. You can partner with other businesses in your industry to cross-promote your programs. For example, if you're a clothing retailer, you can partner with a local dry cleaner to offer a discount on dry cleaning services when customers purchase items from your store. This is a great way to increase foot traffic and grow your business.
6. Offer exclusive deals
This is a great way to show your appreciation for your most loyal customers. You can offer exclusive deals and discounts to customers who participate in your cash back rewards program. This is a great way to show your customers that you value their business.
7. Make it easy to sign up
The easier it is to sign up for your program, the more likely customers are to participate. Make sure your sign-up process is simple and easy to understand. You can even offer an incentive for signing up, such as a bonus point or a discount on their next purchase.
8. Promote your program
Make sure your customers know about your program. Promote it through your website, social media, email, and in-store. The more exposure your program gets, the more successful it will be.
9. Measure your results
It's important to track your results to see if your program is working. Measure your sales, customer loyalty, and customer acquisition. This will help you fine-tune your program and make it even more successful.
Best practices for implementing cash back rewards
If you’re thinking of implementing cash back rewards for your business, here are a few tips to get you started:
- Decide what type of cash back program is right for your business. There are many different types of programs, so it’s important to choose one that will fit well with your business model and your customer base.
- Set a competitive cash back rate. If your cash back rate is too low, customers may not be motivated to participate. On the other hand, if your rate is too high, it could cut into your profits.
- Promote your cash back program. Make sure your customers know about your program and how they can participate.
- Keep track of your program’s performance. Regularly review your program to ensure it’s meeting your goals and making a positive impact on your business.
- Be prepared to adjust your program. As your business grows and changes, your cash back program will need to change as well.
Future of cash back rewards is bright
As the world becomes more and more digital, businesses are looking for ways to stand out in the crowd.
Cash back rewards are a great way to do that. Not only do they provide a valuable benefit to customers, but they also help businesses increase sales and profits.
If you’re thinking of implementing cash back rewards for your business, there’s no better time than now.
With a little planning and effort, you can create a program that will benefit both your customers and your business.
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Insightful article! The tips on leveraging cashback rewards to boost profits and customer loyalty are spot-on. Particularly appreciated the advice on partnering with other businesses and promoting the program. Essential read for businesses looking to innovate and grow.