Attracting customers is one of the most important goals for every business that operates online. But, retaining those customers and establishing a long-lasting relationship with them is even more important. Consumers nowadays have many options to choose from, especially since the market is overcrowded with various offers. However, in order for consumers to choose a specific business over the other and become loyal, the business must offer something truly valuable.
That’s why companies leverage creativity and innovative thinking to develop all sorts of loyalty programs and reward systems for their trusted customers, with cashback programs being one of the most effective ones. A cashback program acts as a tangible compensation, where instead of discounts your customers get cash as a reward. This method is more effective than discounts because, instead of paying less for a single product, your customers can spend the cash rewards elsewhere. Here are a few ways cashback programs can help with customer retention.
It’s a proven strategy
Did you know that 83% of consumers are more likely to continue doing business with a company because of a loyalty program? Also, 76% of consumers believe that being a part of a loyalty program is a part of their relationship with the brand. Loyalty programs, as their name suggests, reward customers for their loyalty. That means that you encourage your customers to do repeat business and reward them for it. Moreover, customers love loyalty programs because they make them feel appreciated, businesses improve their retention rate because of them.
Cashback programs are one of the most appealing loyalty programs for customers, because, as mentioned above, they give them a more tangible and memorable rewards. Also, businesses rely on loyalty programs to improve their retention rate because it’s around seven times more expensive to attract a new customer than it is to retain one, while existing customers spend 67% more than new prospects.
More effective than discounts
Honestly, discounts are a great way to show appreciation to customers and reward them for their loyalty. Also, customers can get an item for a bargain, which is quite convenient. However, cashback programs offer more value to customers, as they invite them to earn money by spending money.
Having cash as a refund instead of a discount, gives your customers more flexibility to purchase other items with the money they got back as a reward. That way they can continue to browse items or come back later when they find something that interests them more. For retailers, this improves customer retention rate, as customers will be encouraged to make more purchases and earn more cashback rewards for later use.
No need for a bank
Normally, any cashback incentives between senders and recipients are handled by a third party, usually in a bank. Also, cashback incentives usually get sent out as checks, which requires the recipient to make trips to the bank, while banks impose fees upon transactions as payment for their services. However, with cashback programs, retailers can issue their own physical prepaid cashback cards, like a universal gift card and help customers avoid the banks altogether.
On the other hand, customers can make purchases with their own prepaid cards without having to worry about additional fees or having to go to a bank. Furthermore, millennials aren’t really fond of banks and 73% of them prefer to handle their finances with online providers. That means that retailers can be far more effective at retaining the millennial crowd by offering cashback as their loyalty program.
It helps promote business
One of the biggest advantages businesses can have from implementing a cashback program is expanding their reach and further promoting themselves. The customers have added value and flexibility with their reward and they also have a more tangible reward for their loyalty. As a cashback program is more convenient, satisfied customers will undoubtedly promote the company and its program through word-of-mouth recommendations to their friends and family.
Moreover, businesses can customize the prepaid cashback cards with their logo or other design, which helps draw the attention of other potential customers through marketing and promotions. In addition, it will improve retention rate, because every time a customer who possess your prepaid cashback card opens their wallet, they’ll be reminded of your business and its program.
Loyalty programs are an effective way to retain customers and reward them for their repeat business with your company. The fact that there are over 3.3 billion loyalty memberships in the U.S. alone proves that consumers enjoy these programs. If you want a cost-effective and simple loyalty program to help boost your customer retention rate, then cashback program is the right one for you.