Erica Forrette

Why Cash Should Be Your Loyalty Program Reward Currency

Thousands of loyalty programs exist today, spanning a wide range of businesses. Over 90% of organizations in the travel & leisure industry have a reward program in place, according to estimates. In general, all programs can be divided into several buckets based on how the consumer is rewarded in the end, whether through financial incentives, programs that use an alternate currency like points or miles, or another kind of payment structure.

As loyalty programs grow in popularity and evolve, the preference by consumers for cash vs. other types of rewards has also grown. At Wildfire, in focus groups with loyalty program members, we learned that the majority of these respondents preferred cash over any other type of loyalty reward incentive. And according to a recent survey by Prosper Insights, 44% of respondents use their credit card more when cashback is the incentive.

Changes in travel industry loyalty programs

A major driver for customers' preference for cash has been recent changes in travel industry loyalty programs have a big impact on cash preference. Some of the industry's biggest names, such as United’s MileagePlus program, significantly devalued their points recently. In 2020, points inflation hit the airline industry, and in some cases trips that previously cost 40,000 points went up to 80,000 points virtually overnight. 

Other changes are on the way in 2022 to many other airlines' loyalty programs, making it harder to earn and redeem points or miles.

Customer experience is key

Against the backdrop of changes like these, the overarching theme is customer experience. Customer experience has been identified as the #1 priority for companies headed into 2022 according to a survey by SuperOffice.

Keeping the customer experience in mind when approaching how to structure a loyalty program is critical. To this end, there are a couple of reasons why offering loyalty rewards in the form of cashback to consumers has become a more favorable approach. 


One reason is because today’s consumers expect convenience as a core part of any customer experience with a brand. For example, even though stores have reopened, customers are continuing the convenient new habit of buying online and then picking up at the store.

Taking convenience into consideration, you can provide your customers with the ultimate in convenient, flexible redemption options - e.g. cash - as one way to convey your business' priority of a great customer experience for your loyalty program members. 

The effect of inflation

Another reason to consider cash as your loyalty program "currency" is due to the effects of inflation. With prices rising, customers look for ways to offset those increases, and cashback is a quick antidote.

A recent American Banker article noted this trend, summarized by this quote from Daniela Hawkins, managing principal at the financial services consulting firm Capco: "During uncertain financial times, consumer behavior trends toward cash-back rewards, and the advantage is that when the cost of goods increases, so too do the cash-back rewards for every dollar spent." 

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Cashback is good for the customer AND the merchant

Finally, while the customer experience benefits of cash as a loyalty program reward are undoubtedly significant, cashback provides benefits for both the consumer and the retailer. When introduced at the start of a shopping experience, cashback can function as a conversion rate and AOV driver for retailers.
Here's how it works: when a shopper activates a cashback incentive, the psychological influence of that activation acts as a magnet, drawing the consumer through to the completed sale so they can collect the cashback reward they initiated. We've noticed this effect in our own data at Wildfire. Globally, from a website visit to a purchase, the average e-commerce conversion rate is around 1.77%. But, when consumers activate a cashback reward before they purchase, over 15% of them complete the transaction! 

Additionally, retailers can realize greater AOV as a result of the cashback activation. "If I'm receiving a good bargain, I should buy more," customers conclude. Cashback is viewed as a value-add by customers (e.g. getting some sort of bonus just for spending the same amount).

At Wildfire, we've found that when customers complete purchases after activating a cashback offer, their average order value (AOV) is up to 81% more than if they visited that online business via links from Facebook or Pinterest. 

Cashback in Loyalty Programs

Loyalty programs have become table stakes and customers have grown to simply expect them. Offering cash as a loyalty program incentive is a powerful tool for businesses to enhance conversion rates and AOV. As well, it benefits customers and offers a positive experience with any company that has a simple and flexible cashback reward option.

Furthermore, because few loyalty programs provide cashback rewards, cashback as a loyalty program currency could be the determining factor in whether they choose one store over another.


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Published by Erica Forrette December 22, 2021
Erica Forrette