When creating a loyalty program, there are many ways to reward customers, such as free shipping, vouchers, free items, and cashback rewards.
Cashback rewards in particular have been a common favorite among traditional loyalty programs.
In this article, we’re going to talk about cashback rewards, what they are, how to use them and how to use Gameball cashback campaigns to increase your customer engagement.
This article is part of Gameball’s Product Strategies series, where we’ll be covering topics to help store and business owners, as well as marketing and operations managers, make the best use of Gameball’s loyalty and customer retention programs.
Let’s dive in!
Cashback in loyalty programs
What is a cashback reward?
As its name suggests, a cashback reward is a type of loyalty program reward that translates into a cash discount or reward that customers can use in their next purchase.
Cashback rewards have been widely used because they increase loyalty and retention among customers.
Customers view cashback rewards as a means to get their money back – sort of.
How do cashback rewards work?
When customers are shopping in your online store, they are paying money.
As a store owner, you will give them a percentage of the paid money back to them as a reward for shopping in your store.
How can they get that money? By shopping from you again and again.
Also as a store owner, you get to decide what that percentage is.
Let’s take an example: Let’s say you have a customer who spent $100, their cashback is designed to be 5%.
The best way to determine how much of your customer’s spend will translate into cashback rewards is through a loyalty program’s points system. All customer loyalty programs include points, which customers accumulate based on purchases they make.
The $100 spent by your customer can translate into 100 points, which result in a $5 cashback reward.
Let’s look at the following table and different configurations so you can better understand how to reward customers using the cashback method and how to determine the points value based on the desired cashback reward.
|Example||Amount Spent||Rewarded Points||Cashback %||What should be the point value?|
|1||$1||1||1%||1 point = $0.01|
|2||$1||2%||1 point = $0.02|
|3||$1||5%||1 point = $0.05|
In the first row, every dollar spent translates into a point, and let’s consider this as a constant rule.
Let’s take example 1 in the above table, as a store owner if you decide that customers get 1% as cashback then each point would mean $0.01. If any customer paid $500, they will receive 500 points, which means that your customer will get $5 as cashback (1% of the paid amount).
In case the cashback is 5% as in example 3 in the above table, 500 points equals to $25 as each point would mean $0.05.
Decide on the cashback value
Deciding on how much customers gets when they use your loyalty program is very important.
For you as a business owner, you can see how much you’d be giving back to customers.
The cashback reward doesn’t mean the customer will be reimbursed by $5. No, they’ll be getting the cashback as a kind of voucher or discount on their next purchase.
In other words, customers will be re-investing the cashback in your store once more.
Drive traffic with cashback campaigns
In addition to retaining customers and getting them to buy more from you using cashback rewards, these types of rewards can be used as part of campaigns to drive or increase seasonal traffic in your store.
Let’s say, you know that in the days after the Black Friday Cyber Monday weekend and until the week before Christmas, traffic tends to be low.
So why not use the cashback rewards option to get people to buy during that period?
Set up your cashback campaign
- First, you need to define the start and end of the campaign. Let’s say it’ll run from 15 to 20 December.
- Then, you’ll apply a reward rule for the duration of the campaign. This means that if you normally reward buyers with cashback of 1%, during the campaign you’ll increase the cashback reward to 2% or 5% or even 10% or whatever you choose.
- You’ll send a notification – or email – to customers with the cashback campaign so they would know that they can get better cashback rewards during that time frame.
Here’s an example of a 2x campaign below:
|Regular Cashback||Campaign Cashback||Fixed|
|Amount Spent||Rewarded Points||Cashback %||Rewarded Points||Cashback %||Point Value|
Here’s how this table is different from the first one:
- Here you doubled the rewarded points for every $1 spent amount.
- Instead of giving 1 point for every $1 spent, you will give 2 points.
- This will double the cashback automatically as shown in the table
Pro tip: Don’t ever change the point value, as this will be your reward currency. Keeping it fixed to avoid confusion and any potential miscalculations.
Ideas for cashback campaigns
Now that you know how cashback rewards campaigns work and how to set them up, let’s what else you can do with these campaigns to make the most out of Gameball and to get customers active in your store.
For this, we will provide you with a list of cashback campaign ideas you can use.
Your campaigns should be based on your needs and available inventory.
For all of the following campaigns, we recommend notifying customers in advance about the cash reward double-up.
Get customers to get double the number of points during a specific weekend.
Similar to the happy weekend but for one or two hours, customers can get double the number of points or more.
Let’s say you’re launching a new product or service. A great way to create hype is to launch with a bang or in this case with and attract double-points cashback campaign to get customers excited to try your new product or service.
Clearing up your inventory
It’s no secret that businesses get “New Season” products every quarter or every season, especially if it’s a clothing store. You can use cashback rewards to get customers to buy up the remaining products in your inventory so you can make way for new products.
One more sales-increasing tip
Another idea that you can do as a store owner or marketing manager is to change the expiry date for cashback rewards collected.
- Start a campaign with 5x the regular cashback
- Decide on the start and end dates
- Change the expiry date for the points accumulated during the campaign.
- If points expire regularly within 12 months, you can tell customers in advance that cashback rewards accumulated between 15 and 16 December, for example, will expire within 2 weeks.
That way, your customers will be in a hurry to redeem their points, which means more sales for you.
Another idea to benefit most from changing the expiry date is to:
A tip though: Try not to apply this to every cashback campaign or for the general cashback rewards option for your store.
You don’t want customers to think they are constantly on a short leash so that buying becomes a headache for them.
You now know what cashback rewards are and how they work. You’ve also seen the ideas that can be used to boost your sales and drive traffic to your store.
If you still need help, our customer support is available round the clock and we’ve got a help center for cashback rewards and other options on the Gameball loyalty program app.
Start your first cashback campaign via Gameball now and get customers to reuse those cashback rewards.