Understanding the Difference Between Discounts and CashBack
Discounts are a great way to make less money on each sale. Let’s break this down:
A first-time shopper comes to your site and has their eyes on a $100 pair of shoes. The coveted “20OFF” pop up flashes across the screen, making their decision to purchase a no-brainer. Awesome, right? Not so much.
From the jump, you’re losing 20% of your revenue. Not to mention, you’ve set the precedent of serial discounting from the beginning of the relationship. All too often this means the shopper will hold out coming back to your store to buy again until they get another magical discount code deal in their inbox. It’s a vicious cycle that always ends with your bottom line being compromised.
Now, let’s run this scenario with CashBack:
The same first-time shopper has their eyes on the shoes. They see your “20% IN CASH OR CREDIT” banner flash across the screen, making their decision to purchase simple. A tiny difference, with a massive impact. All of a sudden your brand earns:
- Full price sales: the shopper will spend $100 today, meaning no loss in revenue for you
- Free retargeting: the shopper will now have a $20 incentive – what you would have given away up front in the discount example – to come back to your site later and redeem the CashBack.
TL;DR: CashBack earns you more conversions than discounts do (+8.7% on average!) and turns your shopper transactions into relationships.