11 May 2021

Cashback promotions: When they work and when they don’t

Sometimes the best ideas are the simplest, or so the adage goes. At Insyt, we offer a range of promotions to our clients – from straightforward, easy-to-understand mechanics to more nuanced bespoke setups that play to a brand’s strengths.
But when market conditions are right and a simple way to boost product sales is what’s needed, often a Cashback promotion can be one of the most effective tools in your arsenal.

 

How does a Cashback promotion work?

In many ways a Cashback promotion couldn’t really be more clear-cut – you buy a promotional product and, in doing so, you get some money back.

This is usually done by the customer after they’ve bought the item, by putting in a claim for the Cashback using their proof of purchase.

What are the advantages of Cashback promotions?

Firstly, it’s direct and easy to understand for your own sales teams and consumers are often drawn to them for this reason too. It appeals to price-sensitive customers because, essentially, it’s free money for them. What’s not to like?

It’s a way for you to give better value to customers without devaluing your product, therefore improving loyalty, and through the Cashback claims form you can capture customer data as well. This helps drive improved engagement with, and understanding of, your target market.

What are the disadvantages of Cashback promotions?

To put it bluntly, they’ve been done before and they can be seen as a bit of a dull option.

Beyond giving money back to customers, their scope is quite limited and some brands may be reluctant to run Cashback promotions because it doesn’t help them stand out in markets that are saturated with similar offers.

When do Cashback promotions work best?

Cashback promotions are excellent tools if you’re looking to improve consumer sentiment towards your brand, or a short burst of activity to boost sales quickly and appeal to customers whose focus is on price.

For product ranges that are approaching the end of their life, for instance, Cashback offers can provide a short, sharp boost to clear any remaining stock.

They’re also a perfect partner to a Buy & Try promotion as a great additional disincentive for customers to return a product bought on this basis.

When should I consider an alternative to Cashback?

In our experience, Cashback promotions are less effective with high-value products and early in a product’s life cycle. For example, it’s generally not a good idea to launch with a Cashback offer – it can devalue your brand if you’re offering money back for a new product.

Cashback promotions also tend to provide weaker returns on investment if lots of competitors in your market are offering them already.

Insyt is your promotions agency with intelligence. We offer a wide range of bespoke promotions olutions, including Cashback, that can help boost your sales, brand sentiment or customer loyalty.
Get in touch with us today to see how we can help your business: hello@insyt.com