Why cashback instead of discount in consumer marketing?

Cashback is the latest reward program that has been gaining momentum of late. Not only is it pleasing for the consumers who get a good fraction of their spending back into their account, but it is also advantageous for companies and businesses that are trying to broaden their reach and popularity and have a solid customer base through customer acquisition. 

In comparison with traditional discounts, cashback promotions are more effective and appealing to consumers. Their potency drives many businesses to partner with cashback offers apps to leverage their business and get exposed to a wider consumer base and reap its immense benefits.

What is cashback? 

The name says it all. In the easiest terms, cashback is a part of money a consumer gets back after spending money on buying something. It is a percentage of the order value returned to the buyer as a reward for shopping at a certain app or with a certain merchant. 

It allows businesses and brands to do more business, both online and offline, without affecting the sales and figures negatively. It also allows them to maintain their profitable price margins while providing numerous benefits by engaging consumers.

How does it work?  

To provide cashback to consumers, a brand or business has to collaborate with the popular cashback apps or websites. These applications or websites provide a platform to the consumers for shopping, booking tickets, paying bills, etc. 

When a consumer purchases something through these apps or websites, a fraction of their money spent is added to their account as cashback. This cashback can be again utilized for making further payments on the same app. Each cashback earned has a potential value that can be redeemed on the next purchase.

How is cashback better than discounts? 

Although heavily used as a promotion and branding strategy, discounts aren’t the best method. 

Let’s say a company offers heavy discounts very frequently to its customers. Over time, the brand might lose sales or lose customers if they decrease the discount amount. It also affects the sales margins. Hence, it would not be optimal for brands to offer discounts repeatedly. On the other hand, companies will never fall short of offering cashback as it is part of the money that consumer spends on buying an item. It is a win-win situation for both brands, cash back apps, and consumers as all get benefitted adequately.

Cashback is a cost-effective, simple, and result-oriented promotional activity.

Benefits of cashback offers 

A UPI app cashback offer entices customers to stay loyal to the brand. Here are some of the key benefits of cashback offers-

  • It Increases Customer Base & Sales

The money a consumer ends up earning towards cashback is then spent again on making further orders. This way the customer keeps coming back to the app and business to redeem their cash back and spend more money by placing further orders. This keeps on repeating on loop and results in increased sales and revenue for the business. A cashback app gets benefitted from customer acquisition, retention, and enhanced user experience.

  1. It puts a brand above the competition

In the sea of brands and businesses, it is often difficult for consumers to select their favorite brand and show loyalty. However, with the help of cashback offers, brands can entice customers and foster loyalty.

Cashbacks ensure immediate sales and add value to the offerings. It is not unusual for consumers to shift their loyalty from one brand to other in the lure of cashback. Hence, a cashback promotional marketing strategy puts a brand above its competition.

  1. Brands get their hands on more customer data 

To redeem the cashback reward, a consumer has to provide specific information, such as payment details, proof of purchase, etc. As brands get this information, they can use the details to reach out to the customers directly and curate their campaigns as per their consumers’ interests. It also helps brands to direct customer relationship management programs.

Furthermore, asking tactical questions helps brands understand their customers and determine their loyalty lies. It also helps brands to improve their offerings.

  • Improves brand visibility 

Brand awareness is the core of brand loyalty. If people don’t recognize a brand, how can one expect them to be loyal to it? 

Cashback rewards are engaging. They catch a consumer’s interest and make the brand more popular. With cashback, a brand gets an edge over its competitors. 

Cashback offers and promotions are the core of a brand’s success. Amidst other promotional activities and strategies, cashback promotion is highly in demand, safe, secure, and effective. Fave pay app is one of the most reliable UPI cashback apps that offer cash backs to consumers when they shop at Fave partner brands.


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