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For a client, there’s no more satisfying feeling than making and paying money at the same time. And this is the exact belief of a cashback reward program: obtaining a small amount back after each purchase. But is this kind of program enough to keep buyers around in the new customer reality? How to maximize the gain of this program? And most importantly, how can you execute a cashback reward campaign?
Examples of them are Moorwand and Monavate, though there are many others.
What's a cashback reward program?
Cashback reward programs are represented by a simple formula: with every purchase a client makes, they earn an amount of money back. Cashback requests are popular, because they deliver instant gratification, supporting the customer’s decision to shop.
Different types of cashback programs
The following are the most common forms of cashback:
- Flat rate cashback: Receiving a flat rate cashback, regardless of spend type.
- Tiered rate cashback: A tiered cashback rate depending on annual spending. For example, a 0.5% cashback rate if annual spend is below EUR 3,000 and a 1% cashback rate if annual spend is above EUR 3,000.
- Different rates of cashback: This form of cashback has different rates depending on where the money is spent. For example, grocery shop spending may have a 1% cashback; fuel spending may have a 2% cashback, etc.
Various use-cases of cashback program
Romain is an individual who mainly pays via debit card or cash. Recently, he signed up for a reward debit card solely for the cashback, which is 2% and eligible on all purchases.
Over one year, Romain made EUR 15,000 in purchases on the reward debit card. Assuming a 3% transaction fee charged by the credit card company to merchants, the transaction fees collected from merchants by the reward debit card company total EUR 450.
How to maximize the gain of cashback rewards
Crypto Rewards Debit Card
Although different industries have started using crypto rewards, debit cards have taken the lead, coming with slightly different types of rewards. For example, when they use a debit card, they can receive digital currency as a reward or earn points or cashback, which they can later convert to cryptocurrency to exchange for other benefits.
Some crypto rewards debit card, such as bitcoin or Ethereum, can be used to purchase fast food, art, electronic equipment, or even cars. Also, numerous stores and services online have enabled this payment channel, like Shopify, Xbox, and Starbucks.
In some cases, customers with crypto rewards have access to something similar to a virtual wallet. These wallets offer benefits, such as discounts on new purchases, prizes, or rewards, with companies and allies using the same cryptocurrency.
Despite the differences between crypto rewards and points in loyalty programs, they both offer benefits. Therefore, with the help of these platforms, like Striga, business owners can experience an increase in sales.
Cashback program for better retention ration
Cashback programs should be designed to be centered on the potential of the companies and the needs of the customers. At the moment, there is a quick and very attractive reward model: cashback. This model embraces the return of a percentage of the total purchase price in cash to the buyer.
Cashback is an inventive and useful mechanism for all players in the chain as brands reward their customers with money for actual purchases of their products or services.
This process transforms the discount model into one that returns the money. Customers, on the other hand, get a proper benefit. They can use the money according to their needs. To introduce cashback programs to your store, you’ll need special eCommerce software. If your business is operating in the hospitality and food industry, you can use MOBI. Their customer loyalty functionality will let you offer personalized cashbacks and other rewards based on your customers’ preferences and purchase history.
What are the advantages of the cashback model?
We understand what cashback is, and how consumers get it. We still haven’t covered why a business should choose to offer it! Let’s take a look at some of the top benefits to businesses of offering cashback as an incentive.
Improved sales metrics
The notion of making some money out of a sale may encourage customers to use the cash debit card rather than paying cash. Additionally, it leaves the customer satisfied with something to look forward to in the next shopping spree. As a result, they may pass the positive word to their friends and families for increased referrals and loyalty.
Improved cards conversion rate
Giving discounts has been an old-age tradition to entice new customers into a business. Cashback cards serve the same role in providing incentives to clients. However, shoppers get motivated by Cashback more. The thought of getting something in return works magic. With planned cash back payments to your clients, Cashback improves your cash flow to great lengths.
More affordable option of rewarding your clients
A successful business involves a give and takes concept between the buyer and seller. There are various ways of enjoying customers and especially repeat ones. Standard loyalty programs entail giving your clients something to repeat visits to your site or spending a specific amount of money. Relying on what you are selling, it can either be a free service or a coupon. Giving such kind of rewards has detrimental effects on any business running. Yet, cashback rewards may save the day.
Incentivises routine purchases and loyalty
Many cashback programs offer a standard 1% cash back on every purchase, which on a €5 purchase would mean giving €0.05 back to the customer. Here are two examples and what it could cost neobank when a client uses his debit card:
Spend €20 with your debit card, and get a free coffee and cake with points
Visit 1: Spends €5
Visit 2: Spends €5
Visit 3: Spends €5
Visit 4: Spends €5
Visit 5: Spends €0, gets a free coffee and cake
1% Cashback on every purchase
Purchase 1: Spends €5, gets €0.05
Purchase 2: Spends €5, gets €0.05
Purchase 3: Spends €5, gets €0.05
Purchase 4: Spends €5, gets €0.05
Purchase 5: Spends €5, gets €0.05
In the first case, they would have spent €5 if they hadn’t been given the free items. Although this was an incentive to keep coming, it means the business loses that spending.
In the second case, the customer earned €0.25 cashback over the 5 visits. It would go up to €0.50 if you offered 2% cashback. Still cheaper than offering the free item. On top of this, you could have boosted days where customers get 20% back. A week with a model like this might look something like this:
1% Cashback on every purchase
Purchase 1: Spends €5, gets €0.05
Purchase 2: Spends €5, gets €0.05
Purchase 3 (Boosted 20% Cashback): Spends €5, gets €1
Purchase 4: Spends €5, gets €0.05
Purchase 5: Spends €5, gets €0.05
The customer has earned €1.20. Still, less than the free items would have cost the business! But now it’s a more tangible incentive for the customer. €1.20 back in their pocket to spend as they please.
How Striga drives engagement for Neobanks with cashback cards program
By offering a self-branded crypto card-linked cashback program, neobanks gain a partner that can address these challenges while providing innovative solutions to attract and retain clients with frictionless purchases from beloved brands. Cash back programs are a streamlined, rewarding way for them to connect to customers while generating revenue. And with a leading crypto banking partner like Striga, neobanks can quickly put money back into their customers’ pockets while maintaining their customer relationships.
Striga Crypto-native Banking as a Service:
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Join the financial businesses that use Striga’s cloud platform to delight their customers and launch their own products without the complexities that come when dealing with core banking solutions’ relationships, licensing, compliance and payments methods.
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