To be more competitive, businesses constantly seek innovative strategies to enhance customer loyalty and engagement. Among these innovations, cashback rewards have emerged as a powerful tool for customer acquisition, offering immediate value to users. However, the retention of these customers presents a different challenge. One subtle yet impactful strategy is through roundups.
This article explores how cashback rewards effectively attract new customers, why roundups are essential for keeping them, and the underestimated potential of roundups in fostering long-term customer engagement.
Cashback rewards, a tool for acquisition
By returning a percentage of the purchase amount to the customer, cashback rewards not only offer a tangible incentive for shopping but also create a positive psychological association with the brand. This immediate gratification encourages first-time customers to choose a service over competitors. What's even more interesting is that businesses that have used cashback programs have seen revenue growth that is up to 2.5 times faster than that of their rivals who do not.
Another reason why cashback is so effective is because it is simple to understand and easy to use. How easy? With Olive's Card-linking solution, customers can earn cashback on their primary Visa and Mastercard credit cards. No lengthy sign-up is required; additional coupons or cards, just connect and earn. On top of that, cashback earned by customers can be directly linked to their financial goals, providing even more value than the reward. Learn more about how card-linking compliments and evens adds more value to cashback here.
As mentioned previously, businesses can leverage cashback offers to attract new customers. In fact, attracting customers can be difficult and costly for retail brands. Studies suggest that acquiring a first-time customer can cost between 5 and 25 times as much as retaining an existing one. Incentivizing new customers with cashback can mitigate these issues. 46% of cashback participants see it as a significant variable in their purchasing decisions.
Retailers can use it as a cornerstone to acquire customers and build brand loyalty. However, acquiring customers is just the start. How can retailers keep their customers engaged even after a program has ended?
Evolving customers' expectations:
It's important to understand the shift in customer behaviour and, specifically, what they value in their shopping experience. With the cost of living increasing, customers become more financially astute, and 27% of customers want more out of their customer programs. A survey conducted with program managers discovered three important features to help align with customer expectations.
- Increasing personalized offers since consumers respond to them positively.
- Reaching customers at the moment that they are most likely to be interested in an offer.
- Enabling interactivity of rewards programs to retain customers better.
In this landscape, while still appealing, the traditional cashback model can be complemented by rounding programs that consistently provide customers with these features, strengthening retention.
The underrated power of roundups for retention
Roundups, the process of rounding up transactions to the nearest dollar and saving or investing the difference, subtly shift the customer's focus from spending to saving. This mechanism, often overlooked, capitalizes on the human desire for effortless savings, enhancing customer retention by integrating it into their daily financial activities.
Why is this important for retailers? As mentioned before, rounding allows businesses to foster a deeper connection with their customer. Customer programs focused on rounding can keep customers coming back because of the value proposition they offer:
- Rounding is personalized for each individual.
- Rounding is done at the point of purchase, so customers can micro-save while they spend.
- The roundup amount doesn't just go in a vacuum; it's helping customers achieve their financial goals.
Whether it's saving, investing, or even donating goals, rounding is flexible for anyone. It is not a new topic, but it can be even more valuable when paired with goals that resonate with customers. Furthermore, the psychological impact of 'getting more' or 'saving' through rounding encourages customers to make frequent purchases, boosting sales and reinforcing customer retention. This psychological benefit, often termed the "small wins" effect, plays into the broader strategy of
enhancing customer loyalty and satisfaction.
The power of integration
There is a growing need for businesses to recognize the value of integrating such features into their customer engagement strategies, balancing the focus between acquisition and retention to maximize customer lifetime value. They both serve their own purpose and while cashback may be temporary, rounding provides engagement with every purchase.
By underestimating the potential of roundups, businesses overlook a critical element of customer retention. In fact, 80% of consumers are more likely to make a purchase when businesses offer personalized experiences. So, while customers may come for cashback, they are incentivized to stay because of rounding.
Where Olive comes in:
As a card-linking platform, Olive makes it easy to implement rounding and cashback customer programs. Olive is here to converge goal alignment between retailers, and customers by making it easier to implement a frictionless program that is more accessible for customers. Whether it's implementing rounding or cashback rewards, Olive can help your loyalty program stand out.