E-traders: why deploy a cashback program?

E-traders: why deploy a cashback program?

Before getting to the heart of the matter, there are two basic elements: a definition and some figures.

Cashback describes “the discounts offered online by partner traders, via affiliation. This discount is applied after the purchase, with a reimbursement carried out for the consumer.” (Source: Wikipedia). This kind of marketing tool is part of the family of affiliation tools and is mainly found on trading sites that focus on “cultural products” or “high-tech” ones. Why does it work? The consumer sees “real” money, transferred to their bank account, which they will be able to spend as they see fit.

A study commissioned by the SNMP – French National Union of Performance Marketing – published the 21st October 2013 reveals a few interesting figures:

  • 44% of internet users know about cashback and 18% are subscribed to a program of this kind;
  • In the 1st quarter of 2013, cashback was able to generate nearly 200 million euros in turnover for partner traders (+27% compared to 2012);
  • Over this same period, the purchasing basket linked to cashback was 15% higher than the average basket recorded on traders programs;
  • Cashback is a decisive criteria in their purchase for 75% of internet users surveyed.

Loyalty comes from freedom!

Paradoxically, transferring money to the consumer so they can do what they want with it is a tool for increasing the loyalty of the online purchaser. It is there where, for decades, discount programs or vouchers only valid on the trading site or their partners have been multiplying. Cashback offers spending freedom to the purchaser.
The study shows that 24.4% of loyal purchasers are subscribed to a cashback program, which encourages them to consume more…

E-traders: why become affiliated with a cashback community?

The figures are blunt: the referencing of a trader with a cashback community is an essential point:

  • 82% of respondents said that it represents a sign of quality and trust before proceeding to the purchase.
  • 74% expressed the fact that they were able to discover new traders via this intermediary.

Here is an extract from a graph that is available in a complete form here

Encouraging reasons to subscribe to a paying cashback program

  • 49% To be able to accumulate cashback as well as discounts on purchases
  • 46% To have access to a very large number of traders
  • 43% Benefit from exclusive advantages
  • 35% A minimum amount of cashback guaranteed
  • 30% The offers that I benefit from are also valid in physical stores
  • 16% A toolbar that lets me know straight away if I am benefiting from cashback
  • 5% To be able to access a cashback program via your mobile

Source: ecommercemag.com

Yet there are good reasons for not going there…

As always, the picture isn’t always as idyllic as the study presents. There is a debate between Raphaelle Hutin from leverbiz.com and Jean-Baptiste Descroix-Vernier, SNMP and rentabiliweb.com
The discussion, via opposing opinion pieces on the Journal du Net, covered the actual purchasing experience of the internet user and the adverts which showed it off and on which they clicked … or not.

There is no magic solution and so the debate remains open.
Albert Einstein said “There are only two ways to live your life. One is as though nothing is a miracle. The other is as though everything is a miracle”

Something to think over before making your choice on cashback. And you what do you think?