Loyalty and rewards programs have become extremely popular. According to HBR, 90% percent of leisure and hospitality companies, and more than 60% of all companies, offer some type of loyalty program. A survey of 22,000 Americans by Bond Brand Loyalty in 2019 revealed that on average, consumers belonged, on average, to 14.8 loyalty programs!
The types of rewards offered by all the different loyalty programs vary - they can range from exclusive discounts at a business, to exclusive sneak-previews of products or services, to “points” awarded for redemption for various goods, to simple cashback.
Simple cashback is often the most preferred currency for consumers in a rewards program especially in the credit card or banking industry. But in some cases, rewarding a customer in dollars and cents doesn’t address a business’ specific goals. For example, some businesses have their own currency or their own defined objectives for the customer. So how can these types of businesses still benefit from a loyalty program with cashback as the engine?
First, the basics… how do cashback loyalty rewards work?
The hottest trend in loyalty programs right now is using merchant-funded cashback through shopping programs. In these programs, customers shop through some sort of shopping tool like a browser extension, a special branded shopping portal, or a shopping app.
When a person makes an e-commerce purchase through a browser extension or shopping portal, that e-commerce merchant “pays back” the sponsor of the browser extension or shopping portal as a small percentage of the sale (known as a rev-share or a commission.) You’re probably familiar with this model - it’s classically known as affiliate marketing or pay-for-performance. E-commerce brands actually have dedicated affiliate marketing customer acquisition budgets that fund these commissions.
The sponsor of the browser extension or shopping portal/app turns around and pays the customer a portion of that commission as a reward for using their shopping tool. In essence, the sponsor is using the e-commerce merchants’ affiliate marketing budgets to fund their own customer loyalty & cashback programs.
How to use cashback rewards to fund loyalty programs in 4 verticals outside of banking
Even if a business doesn’t want to offer literal cashback rewards in their own loyalty program, they should not overlook the potential for cashback to fund rewards in their own native environments or business models. Keep in mind that e-commerce brands have virtually bottomless commission budgets. This is because, as noted, these are pay-for-performance. So these merchants are happy to pay for actual sales that are made, in contrast to paying for advertising costs and not being sure if there will be a sale.
So, regardless of your industry, if your business can act as a shopping companion and refer people to brands’ websites, and then effectively drive sales for that brand, then you should leverage that power. Use a cashback rewards program in a new way to benefit your own brand as well as increase loyalty by benefiting your customers.
1. Cryptocurrency-related products
Cryptocurrency seems to be everywhere these days. But how can a company in the crypto space benefit from cashback loyalty rewards?
The universe of crypto-related products is wide - crypto trading apps, investment platforms, wallets, social networks, and more. Each product in the crypto universe has an obvious common thread: acquiring and managing crypto holdings. So how can your crypto-related product benefit from a cashback loyalty program? Easy - enable users to earn cryptocurrency from their online shopping.
Using a loyalty platform that captures e-commerce sales and merchant commissions, your crypto company can become a trusted shopping partner that helps customers earn cashback on their e-commerce purchases. Then, use the cashback generated by the merchant commissions to “pay back” your customers an equivalent amount in cryptocurrency.
2. Digital-only platforms
Many digital-only sites & apps exist nowadays that help customers with specific services. For example, just to name a few:
- Lyft/Uber: on-demand car hire
- Uber Eats/DoorDash/GrubHub: food delivery
- Wag/Rover: dog walking and pet sitting
- Instacart: grocery ordering and delivery
- ... you get the idea!
With these types of businesses, customers are in your app/platform to accomplish specific goals. With an embedded cashback loyalty program, you can reward your customers in the form of credits specific to your business.
Whether it’s a bonus Lyft ride or credits towards weekly dog walking appointments, get creative with how you can fund bonus “things” for your customers by translating cashback from their e-commerce purchases into rewards they’ll appreciate and use - right within your existing business!
3. Low frequency businesses
How often do you interact with your insurance company? How about with a loan provider? For most people, it’s only once a month - when the bill comes due. (And sometimes if the bill is on auto-pay, they don’t interact with the company at all!) This type of business - with low-frequency interactions - can benefit significantly from a cashback rewards program funded by e-commerce purchase commissions.
In this scenario, a cashback rewards program can increase your brand’s customer touchpoints to as many as ten times per month - because your brand is with them as a shopping partner, there to remind them of cashback opportunities.
Plus, these types of companies can take it a step further and turn those cashback commissions into something else, such as putting micro-payments towards a loan principal. In this way, businesses with a potentially unpleasant monthly interaction for consumers (loan payments) can instead turn each customer touchpoint into a positive association.
4. Video games
Game developers and gaming apps can benefit from cashback rewards too. Using cashback as the engine to capture e-commerce transactions and commissions, gaming companies can reward users with game-related currency.
What better way to continue improving your DAU and other key metrics than by facilitating a way for your customers to keep earning more credits towards actual gameplay - such as when they order food for delivery online, upgrade their monitor or gaming hardware, etc.? Engage your gamers beyond the in-game experience by offering them rewards that can be spent on game upgrades to further enhance their gaming experience with your brand.
How can you use cashback rewards creatively in your business?
When you’re looking at ways to increase customer engagement, drive repeat visits and sales, or increase other company-specific metrics, cashback rewards are just the beginning. With the powerful engine of merchant-funded cashback in place behind your loyalty program, what’s even better is that you don’t even have to spend extra money to give your customers bespoke rewards and additional incentives for them to re-engage with your business.