Cashback and gift cards have become essential tools for optimizing customer engagement. By combining these two strategies, businesses strengthen customer loyalty, encourage repeat purchases, and enhance the overall experience.
Let’s explore the best practices!
Cashback: the go-to solution for conversion and engagement
Cashback is a rewards program that allows consumers to recover a portion of their spending in the form of money or credit for future use. This model is highly effective in encouraging repeat purchases and increasing customer satisfaction. It offers several benefits:
- Increased sales: consumers are more likely to complete a purchase if they get a good shopping deal.
- Stronger customer loyalty: customers who regularly receive rewards (cashback, vouchers, or other incentives) are more likely to return to the same store or brand.
- New customer acquisition: cashback attracts new buyers eager to save money.
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Gift cards: a flexible marketing tool to boost sales
Gift cards are a payment method used both as presents and as motivation tools. A gift card program helps brands boost their sales while enriching the customer experience.
Key benefits include:
- New customer acquisition: a gifted gift card attracts new consumers to a brand.
- Increased revenue: recipients spend an average of 1.4 times the initial card value.
The winning strategy: combining cashback and gift cards
The combination of cashback and gift cards creates a more effective customer journey by leveraging flexibility and rewards. Here are some examples of how to use both strategies to maximize customer engagement and boost sales:
Hybrid loyalty program: cashback converted into gift cards
Instead of transferring cashback as cash, businesses can offer customers the option to convert their cashback into a gift card. This approach encourages customers to reuse their earnings within the brand’s ecosystem, fostering loyalty and repeat purchases.
Example: A customer accumulates €50 in cashback on an e-commerce site. They convert it into a €50 gift card. 70% of users who convert their cashback into a gift card make a purchase at the store within 30 days.
Gift cards instead of direct cashback refunds
Similar to the previous example, customers can choose to convert their rewards into a gift card. However, in this case, they receive a higher value if they opt for the gift card over a direct bank transfer. This increases the perceived value and incentivizes repeat spending within the brand’s ecosystem.
Example: A customer who earns €20 in cashback can choose between a €20 bank transfer or a €25 gift card.
This approach is particularly effective for brands looking to maximize customer retention. Customers who choose a gift card instead of a bank transfer return to shop 30% more often than those who cash out their cashback.
Boosting gift card value with cashback
A higher cashback rate is offered when a customer purchases a gift card, encouraging double engagement. This increases the perceived value of the purchase and encourages customers to return to the brand.
Example: A customer buys a €100 gift card and receives 10% cashback (€10) to use on a future purchase. This strategy works well during special events like back-to-school season or the holidays.
“Cashback Boost” gift cards for special events
Offer gift cards with exceptional cashback during specific periods (Black Friday, Christmas, sales). This drives in-store traffic and encourages customers to spend more.
Example: For every €50 gift card purchased, the customer receives an instant €5 cashback, redeemable in-store.
During Black Friday, for example, a store offering an additional 5% cashback on gift cards can see a 15-20% increase in online sales.
Encouraging deferred purchases with cashback on gift cards
Allow customers to buy a gift card today with delayed cashback, which they can unlock after a certain period. This maintains long-term customer engagement and is a great strategy for boosting sales during slow periods.
Example: A customer buys a €100 gift card in January and receives a €10 cashback bonus available for use in March.
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Conclusion
The combination of cashback and gift cards is a powerful driver of customer engagement and loyalty. This strategy transforms simple discounts into a strategic incentive for repeat purchases.
