Everybody loves a good deal when shopping – discounts and rebates provide customers with a new kind of satisfaction.
Rebates, or commonly known as cashback, is usually used by business to promote their products and drive up sales. By offering return discounts, customers are encouraged to visit the store again and possibly buy another product.
Unlike discounts, rebates are usually claimed after the actual date of purchase. It requires an actual engagement from the customers – filling out and sending back forms to avail an incentive or actually using coupons valued at a certain amount the next time a consumer stops by the shop.
Certain marketing studies show that customers are generally attracted to all sorts of promotional activities such as discounted prices and getting cashback. However, in a study from United Marketing Services (UMS), results showed a higher product recall in customers who availed rebates.
The difference between discount coupons and rebates may not seem too obvious but looking at consumer behavior, the two vary. Price reductions are applied on the spot in discounts. Rebates, on the other hand, offer the deal after the sale is made within a given timeframe.
This offers businesses more room to adjust their promotional strategies accordingly. Moreover, a cashback provides customers additional time before making another purchase decision. Rebate strategies are also used to develop a more long-term relationship with their customers.
Cashbacks lure in customers into wanting more.
Shopping in the digital age
Basic principles of promotions in the retail industry remain but shopping trends changed because of technology over the years. The wide availability of information online has resulted in a shift in customer behavior. This digital transformation paved the way for online shopping to become a thing.
In an article from Financial Times published last December 2019, assumptions made by Mastercard indicated that sales in the retail industry, mostly from online stores, would go up by 3.1% from 2018. Further consumer research supported this forecast, recording a decrease in sales by 7.2% in department stores. Online sales continued going uphill in December 2019.
Forecasts from the National Retail Federation at the time include a sales increase between 11% and 14% in both online and physical stores, with an estimated amount of $162.6-166.9 billion.
With online shopping, customers get to enjoy the convenience of buying stuff in the comfort of their homes. Promotional activities have also maximized digital platforms because of this. Stores have leveled up their game of discounts and cashbacks.
Going digital has made things so much easier for both the seller and buyer – it is quicker and more convenient. Shopping online meant completed transactions in just a few clicks of a button.
Making the most out of digital
Many retailers have adapted to the digital landscape. Retail forecasts in 2019 recorded increased sales from e-commerce. Brands are now widely using online platforms not only to drive sales, but also for the convenience of their customers. Amazon and eBay are known to be pioneers of e-commerce.
Aside from setting up their online platforms, all-around stores like Target and Walmart and leading department stores such as Macy’s and Saks Fifth Avenue cashback have also become widely available digitally.
We Are Social, Hootsuite published a summary of significant digital figures in the US in January 2020.
|Mobile phone connections||353.2 million||1.8%|
|Internet users||288.1 million||0.6%|
|Active social media users||230 million||3.1%|
Given these numbers, the current behavior of existing and potential customers online can be determined more easily. Constant increase in the number of internet and active social media users can also be a basis in the improvement of online promotions and eventually convert them into sales.
Digital tools used to track customer behavior are readily available at a minimal marketing cost. With the help of analytics and algorithms, retailers can efficiently identify the exact preferences of customers.
Knowing what the customers want helps businesses customize promotional efforts like discounts and cashbacks. Crafting rebate strategies become more personalized, hitting the right target audience after is more possible. With the growing competition day by day, brands must take an extra mile in reaching out to their patrons – sweep customers off their feet by giving them exactly what they are looking for.
Improving your business through running rebates
Rebates in the retail industry can be a bit tricky but with the right strategies, this promotional strategy works out well. There are some things to keep in mind when rolling out cashbacks to increase sales.
Carefully plan your rebates way ahead of time.
Planning includes the schedule and allotted for offering rebates on certain products. Make sure everything is in order before releasing the cashback deal to customers.
Invest in digital
Other than its obvious convenience, using digital platforms for rebates is way less expensive too. Cut down marketing costs by utilizing the web for offering attractive deals to your existing and potential customers and in reaching sales targets.
Long-term customer relationships
Another advantage of offering rebates is the chance to build a connection with potential customers and strengthen relationships with existing ones. Since cashbacks are only available after a purchase is made, customers are left with wanting more through these enticing offerings.
Customers are not always right but their satisfaction should be every business’ priority – their needs should always be number one on the list.