Why CashBack is the Better Coupon Alternative
Retention / Loyalty, List Growth, Product Updates

Laura Serino

July 11, 2023

Reading Time: 3 minutes

Coupon codes cost merchants a lot of money. Brands are already giving away a big chunk of their revenue in discounts, but shoppers are just not as excited about a 10% off Welcome discount as they used to be. Coupon codes also get leaked to discount sites, often leading to shoppers using a discount code again and again—not just as a first-time customer. And yet they feel like a necessary evil to drive opt-ins and conversions.

CashBack is the answer because it allows brands to offer bigger incentives that boost list growth and conversion rates, all without taking the same financial hit as traditional coupon codes. Plus, it gives the customers choice in how they are rewarded by shopping at your store. It's a win-win for both brands and shoppers.

Let’s dive a little deeper into how this works.

The Definition of CashBack 

CashBack is not a new concept. For many consumers, sites like eBates or Rakuten are what immediately comes to mind for customers when they hear this term. These sites let you get a very small percentage of cash back (could be as small as 1%)  after shopping at a variety of sites that use them. 

When we talk about implementing CashBack, we’re referring to gift cards: either to your store or in the form of a Visa pre-paid card. And similarly to how these other sites work, the reward comes in the post-purchase journey, not as an upfront incentive.

Many customers choose to redeem their CashBack as store credit. In this scenario, the LTV of your customer increases and if the credit is never used, it reduces your customer acquisition cost (and don’t we all want a lower CAC?)

And when a customer does use the store credit again, they spend an average of $59 more on their order—in fact, 75% of people who redeem gift cards end up spending more than the value of their cards. We also know that shoppers using gift cards are 2.5x more likely to pay full price for an item than a customer paying with their own money.

Chart-Coupons-vs-CashBack


How CashBack Works


When a UTM is present, a cash back product is added to the cart. After checkout, the user receives a text or email from Fondue letting them know to redeem their cash back. 

During redemption, the customer has the option to choose a store gift card (for a bonus redemption value) or a Visa pre-paid card for the standard redemption value. 

After redemption, the customer must wait 30 days (typically) for the order return window to expire, and then is given a Shopify or Visa pre-paid card. 

Test CashBack in the Wild

If you’re uncertain if CashBack will be enticing to your base—test it out. When you get started with CashBack, we recommend replacing it for an A/B test anywhere you normally use coupons.

Let’s look at a real-life customer experience from Succulents Box.

Here you can see the CashBack offer on-site in a banner on the homepage.

Succulents Box - Banner

And they remind shoppers that this will be applied to their order on the product page level too.

CashBack - Product Page - Succulents Box

When a shopper makes it to the cart, they will see the CashBack option appear right in their cart.

Succulents Box - CashBack - Fondue App - Cart

And again during their post purchase confirmation in your store.

Fondue CashBack Post Purchase - Succulents Box

A merchant can send customers an email and/or text message to have them redeem the CashBack offer post purchase. They’ll receive it immediately after they purchase. Here's an email example sent from Fondue.

Email Example - Fondue CashBack

Here’s where a customer has a fun choose-your-own-adventure style experience post purchase.

They go to claim their reward and are presented with a form to fill out and then their two CashBack options:

Choose Your Reward - CashBack - Fondue
Post Purchase Reward - Visa Prepaid Card or Store Card - Fondue

Once they choose their reward, they’ll have to wait until your store’s return window has expired. This is done to ensure that fraudsters don't take advantage of the CashBack system, so this will vary depending on what window you want to set for your store until they receive their CashBack.

Fondue - Reward Confirmation

This is a great opportunity to send follow up texts to anyone to remind them that their CashBack is ready to spend once that window has closed.

You can also use CashBack as a new way to promote big sales events, like Obvi has done during their Fourth of July sale.

Obvi 4th of July Sale - CashBack

If you use 20% CashBack as an ongoing offer, testing out a higher CashBack reward during peak sale seasons is a great way to generate higher AOV and incentivize shoppers to buy and redeem even bigger rewards.

Try using CashBack wherever you normally use coupons—from the popup on your site to a winback automation—just to see what kind of lift that offer can give your store.

Coupons are Cool, CashBack is Cooler

When it comes down to brass tacks, the data tell us that customers prefer the flexibility of CashBack and enjoy their own post-purchase experience.

Postscript wants to make ecommerce merchants more money than anywhere else. Part of making money is making money efficiently. CashBack allows merchants to increase email and SMS sign ups by 31%, boosting welcome series revenue by over 37% and increasing contribution margin up to 5%.  We’re in the business of making brands more money–more efficiently.

And the best part is that testing CashBack versus your current Welcome offer is easy to setup and only takes a couple of weeks to gather enough data. Talk to our team about putting Cashback to the test.

Laura Serino

Laura Serino

Senior Manager of Content and Community

Laura is the Senior Content Marketing Manager at Postscript. She has spent the past decade working in ecommerce. When she isn't writing about her favorite topic (marketing) or listening to podcasts about her other favorite topic (ecommerce), she's hanging out with her two sons on an island off the coast of Maine.

Fill out the form to get in touch with our team, and they’ll show you everything our CashBack solution has to offer—and how easy it is to start with a risk-free trial.

Get in Touch