Why Cashback and Not Discount: The Advantage of Getting X% Back

Cashback? Don’t confuse it with a discount. It’s the way to make your purchase paid but still get money back! Why cashback and not discount can be confusing for some people. And the reason for that is because it seems like a small thing but can have a big impact on your earnings and conversions.

Gone are the days of having to search through tons of catalogs and coupons for that one item you need at a price you want. By using cashback sites, you only have the best deals available with cashback savings automatically applied at checkout, with no confusing codes or points to track.

Why would you offer cashback to your customers and not a discount? Aren’t they the same thing? They sound the same and why would anyone ever choose a cashback offer over a discount. Let’s take a look at the reasons cashback works better than offering a discount.

What is cashback?

Although the term “cashback” is widely accepted among the majority of people, there are still some that are not familiar with it. It might be because they’ve never seen or heard of cashback before. 

Cashback is a percentage part of the purchasing price that the seller refunds to the buyer. There are many reasons why a customer might want to choose cashback. Cashback is “money back”, and who doesn’t like getting money back? 

Cashback rewards buyers for buying, and also gives sellers an incentive to make their deal more attractive than just a flat discount. 

The cashback offer is especially appealing for frequent buyers, who would normally just buy at the standard discount price without any additional incentive. The cashback generated comes from external sources such as affiliate programs.

How does cashback work? 

Cashback is a rebate, paid out by sites where you earn money for doing what you want to do online, like shopping. Cashback sites are easy. Instead of going directly to the retailer’s website, go to the cashback site and use the links that are provided to access the retailer’s website. 

As a result, you will receive a refund from the cashback site for a percentage of your total purchase price when you buy something. There’s no catch, no complicated forms – they reward you for buying the stuff you were going to buy anyway!

How is cashback different from discounts and why is it so popular?

Cashback refers to a certain percent of the amount of purchase from an online store, which is paid back to the shopper as money. It is offered in different ways: some providers of cashback give a check or gift cards in return. 

Some providers offer the cashback as a credit for further shopping while others simply transfer it to the consumer’s bank account. That is why cashback has become so popular among all customers and has become so desirable by online stores alike.

Historically, discount promotions have been more common for increasing sales and attracting new customers, but they have experienced a decline in effective return on investment over the years. Additionally, these discounts undermine the brand’s value for the consumer and prevent prospects from making future purchases at full price.

People tend to associate brands with frequent price reductions and buy from a brand when they are heavily discounted. The discount, therefore, will reduce the value of a brand, which will cause consumers to believe that it is inferior.

While cashback campaigns do not compromise brand value or harm the brand itself, they do create an incentive to buy more. Recurring buyers become more loyal. A loyalty-oriented customer base is one of the most valuable assets a brand needs. One way to make this possible is with a cashback campaign.

How does cashback benefit you as an online shopper?

Cashback sites can be to your advantage. Cashback is a way of saving money whilst shopping online. It’s free, easy to join, and free to use. You could be saving up to 50% on your shopping every time you shop online. 

Cashback is a payment produced by electronic commerce transactions, made to the buyer by the retailer. It is not a discount on the original price. Consumers like it because they get cashback on money that they have already spent. 

Huge eCommerce companies, like Amazon and eBay, began offering cashback as a marketing tool to help them sell more products. In fact, about half of shoppers are attracted to online shops that offer cashback.

Although cashback amounts may be fairly small (typically between 2 and 25%), this can be worthwhile for such a large number of consumers and makes an excellent way to increase average order values. 

The cashback program has two main benefits – money back and loyalty. If you accumulate enough cashback, such as a $10 voucher, it can be used to offset future purchases, dollar for dollar. For loyal customers, the cashback program gives you something for doing what you were already planning on doing- shop online.

Benefits of cashback rewards for businesses

1. Discounting products is not necessary

One of the biggest benefits of a cashback service is to get away from discounting. You are in business to make a profit and cashback is a great way of making the most out of what you do. 

When you discount, your margin is reduced so you must find an alternative to traditional discounts and make sure that your revenue stream stays strong at the same time. Nothing should be cheaper than it already was when launched earlier. 

What you can do in this case is use the cashback program as a means to offer rewards to your loyal customers.

Increases loyalty and regular purchases

For consumers, cashback rewards are a clear way to save money and make their money work harder for them. For businesses, cashback is just as rewarding. Cashback helps increase customer loyalty and keep your customers coming back again and again. 

Since the higher value a customer has in the reward system, the more reward points they can earn. This ultimately leads to higher spending with you, which helps diversify and increase revenue.  

Businesses also receive an increased regular purchase, as cashback rewards give businesses the competitive edge of being able to offer higher discounts than competitors.

Cashback payments draw additional purchases

For online shop owners, cashback is the optimum loyalty program because it drives sales. Cashback is more than just rewards offered to subscribers; it is a marketing strategy designed to encourage customers to buy more from your e-store.

A cashback system creates an incentive for buyers to spend more money because they want to obtain their cash back quickly. This does not only encourage repeat purchases, but it also encourages the customer to make this purchase via your website instead of through a competitor.

How does cashback offer an advantage over a discount?

The reason cashback is better than a discount is because there are few conditions in which merchants provide discounts. 

The customer has to buy the product at full price with online payment, the code can be used only once, and the coupon code is given only to those consumers who spend a minimum amount of money. 

If so, how many consumers have bought at the store that day? And are they willing to spend a large sum of money just to know if the discount is going to work?

Well, you’re going to get the same price either way. While cashback and a discount seem similar at first glance, they are distinctly different. A discount or promotional code offers a percentage of your purchase. 

Cashback, on the other hand, rewards you for buying through it (usually by paying a percentage of the total back to you). Discounts simply reduce the cost of an item; cashback replaces that reduction with an addition to your current financial status before making the purchase.

Why you should consider using cashback apps and sites

Cashback has been around for a long time and the idea is simple. You visit online stores, make purchases and then get cashback. Despite not being so new, rewards programs have been reinvented by technology.  

These cashback apps and sites work simply by you shopping online as you normally would. Each cashback site sets its terms and conditions but in general, if a site offers cashback on a particular product it gives you a certain percent of what you buy. 

Cashback sites and apps can help you to utilize your money more wisely. Even more, taking advantage of cashback sites can make saving money fun. What’s more, they are simple to use.

Earlier, it was really hard to compare the prices of products that were offered by different companies. It was even very difficult to know the price tag of the same item sold by many sellers across the internet. 

However, with online shopping becoming as popular as it is today, it is easier than ever to find good deals on items you want or need. Cashback sites have made it easy for shoppers to get great deals on almost every online store they visit by offering them cash-back rebates.

It’s independent, and you’re in control. While the concept of cashback is simple enough to grasp – stores give you cash for buying what you normally would. It’s also a powerful way of making sure you get the right stuff at the right price.

So, you’ve seen the perks of using a cashback site, why not check out my best 10 cashback sites.

FAQs

What is the reason for cashback?

The reason for cashback is simple. Cashback is tangible and has real value.  When customers are offered cashback promotional offers, the business intends to motivate them to buy its merchandise.

In other words, cashback is a strategy that companies use to involve consumers in the entire length of the purchase journey. This includes incentivizing them to make purchases from them by giving them a reason to do so and also rewarding them for their participation in their marketplace.

Is cashback free money?

No, cashback is not free money. It is money you have earned for buying a product that you would have bought anyway. It’s a commission that companies pay you for your loyalty.

Cashback is based on your spending and you’ll need to spend a certain amount of money before redeeming your cashback reward. The actual rewards and the number of points you earn are also dependent on the category in which you make your purchase.

Are cashback sites worth it?

Yes, cashback sites are worth it. But, there’s a catch to it. When it comes to cashback sites, you have to use them a lot, especially for larger purchases and contracts, such as insurance and gadgets. 

Otherwise, fees associated with cashback accounts may outweigh the benefits. Most sites have their level of cashback percentages that can vary from 0.5% up to 20%. 

If you are someone that only ‘sometimes’ buys online then there’s no point in signing up to every site because you won’t be able to accumulate a decent amount. You will waste your time as well as your money.

Learn more: Are cashback sites real?

When is the appropriate time to redeem your cashback?

Redeeming your cashback is a good choice when all the following circumstances apply:

Expiration date: Cashback offers usually have an expiry date after which the cashback will not be credited. You should make sure that you follow the T&C of the offer and apply for it well before the expiry date. I recommend cashing in your rewards if they’re about to expire.

Redemption minimum threshold: Cashback can only be redeemed if the total transaction amount has met the minimum redemption threshold (It varies for different cashback sites).  Once you are eligible for redemption, please redeem your cashback.

Certain redemption bonuses: They are additions to the standard cashback offered on a purchase. If you are offered a redemption bonus for redeeming your cashback, you will earn the redemption bonus along with the cashback you would have earned if you had not been offered a redemption bonus.

Reward devaluations: Cashback companies can reduce the rewards you earn or cancel promotions. Thereby devaluing your previously earned rewards. The devaluation of cashback is based on the economics of their business model where they offer cashback cheaper than it cost them. 

This means that they have to figure out how many customers it costs them for every 10 customers that buy comes from a referral link, give away free cashback, use a coupon or spend a certain amount. 

It’s important to redeem your cashback as often as possible, particularly if you redeemed them using points earned.

Why do credit cards give cashback?

It is effectively marketed to attract new customers through cashback rewards programs. The providers of these credit cards market their cards with various cashback schemes to attract new customers.

As a reward for using a particular credit card, credit card companies usually give you a percentage of your purchases in cash. Generally, the more you spend with your card, the more you get back. 

Using a credit card that gives cashback is a great way to earn more money for common purchases like gas, groceries, or restaurants. You can redeem cashback as gift cards or use it to make purchases on other websites.

Why do companies offer cashback instead of discounts? 

Cashback offers the ability to offer a percentage back as opposed to a set dollar amount discount. This flexibility allows businesses or companies to offer any degree of savings the customers want. Cashback offers are more profitable than discount offers. Cashback offers are better than discount offers in at least two ways. 

First, and most importantly, the offer of cashback builds trust with your visitors because they think you are giving them real money back, instead of merely reducing the price of the product for them. 

Second, and not as important as building trust but still important – cash offers are often more profitable to you than price discount offers for several reasons. Using cashback allows them to be more competitive, yet still meet their customer’s demands.

Conclusion

In conclusion, cashback is a big deal: it represents another source of income on the Internet. Cashback apps or cashback websites, whatever you prefer to call them, actually work perfectly for both sellers and buyers.   

Sellers can acquire new customers while minimizing expenses on advertising campaigns and sometimes even get a bigger profit than with other marketing activities. 

On the other hand, buyers can purchase products or services they find useful, safe, and convenient at a lower price without having to pay extra charges and commissions.

Everyone likes to save money and getting cashback on top of the much lower price for the goods you buy online is an amazing deal, which is why cashback sites have become popular over the years.
I hope you enjoyed reading this post and found something useful. If you are someone that likes to give opinions online, you know you can get paid for it right? I have created an interesting post on how to get paid for opinions. You should check it out.