As a Shopify merchant gearing up for BFCM, you're probably considering various strategies to set yourself apart from the competition this holiday season. It's easy to jump to the idea of offering last-minute discounts in the hopes of boosting sales. However, it's essential to realize that discounts are a common and often overused tactic during this time, making it challenging to stand out and build long-term customer loyalty.
On the flip side, cashback promotions offer a unique set of advantages. They entice customers with savings and the promise of something extra, which lead to increased spending, higher sales, and a boost in Average Order Value (AOV). Moreover, cashback promotions foster loyalty as customers return to redeem their cashback, paving the way for valuable repeat business. Read more about discounts vs cashback here.
In this article, we'll dive deep into the world of cashback. We'll share strategies to enhance your AOV and explain how cashback play a pivotal role in customer retention. Using real-world examples, we aim to help both seasoned Shopify merchants and newcomers in ensuring your online store succeed during this critical holiday season.
Tiered Cashback Based On Cart Value
One highly effective strategy to encourage customers to spend more is by offering tiered cashback. Instead of simply offering discounts, which can often lead to customers trying to minimize their order total to maximize savings, tiered cashback incentivizes customers to increase their cart value by promising more cashback as they spend more.
Consider this approach: Offer a generous $50 cashback for cart values exceeding $500. When a customer's cart falls just short, say at $450, presenting them with the opportunity to earn an additional $50 cashback can prompt them to add more items to their cart, ultimately resulting in a 10% boost in Average Order Value (AOV).
Moreover, there is a compelling statistic indicating that there is a 70% likelihood that customers will redeem their cashback within the first 6 months. So, tiered cashback not only encourages increased spending but also fosters customer loyalty by bringing them back to your store for more purchases.
As a Shopify store owner, adopting this tiered cashback strategy is a win-win proposition that encourages more spending and fosters long-term customer loyalty.
Learn more about tiered pricing and discounts here.
Case Study: Maximizing AOV with Cashback
Let's dive into the dashboard of one of our customers to gain realistic insights into the impact of cashback on AOV.
Key Observations:
Our customer achieved an impressive AOV exceeding $250, surpassing the industry average of $111 for beauty brands.
Offering immediate discounts would have resulted in profit margin losses. But in case of cashback, out of the 3,800 distributed cashback, only 653 were redeemed, leading to substantial savings of $185,000.
In addition to the $75,000 spent on cashback, our customer achieved a remarkable upsell revenue of $126,000. This highlights the effectiveness of this strategy, as customers return to spend beyond the initial cashback amount.
These insights tell the effectiveness of cashback in optimizing AOV and preserving profit margins, making it a valuable asset for your businesses.
To replicate these impressive outcomes for your own store, leverage the power of cashback with Giftkart. Get the step-by-step implementation process right here.
Welcome Cashback
Welcome discounts are a pretty common practice for brands nowadays. It helps you get your customer’s email and makes personalized marketing possible. Even if initial purchases aren't made, they provide an additional place for reaching out and nurturing potential conversions. While discounts can sometimes be perceived as devaluing a brand, cashback offers a similar benefit without compromising brand image.
Try this approach: Whenever a visitor logs into your store, extend a warm welcome by offering them a cashback in the form of a Gift Card. This can be easily automated using Giftkart’s Klaviyo/Omnisend Integration.
It's important to remember that during peak shopping seasons like Black Friday and Cyber Monday (BFCM), customers often explore multiple stores for deals. Cashback significantly increases the chances of customers returning to your store, particularly when they know they'll receive a gift card.
Incorporating this strategy not only helps attract new customers during BFCM but also encourages their return visits, and subsequent purchases to foster long-term customer retention.
Keeping Customers Engaged After Heavy Holiday Season
While securing sales during holidays is crucial, it's equally important to maintain momentum and retain these customers after the holiday period. This strategy helps you do just that and boosts earnings even during the low season.
During holiday sales like BFCM, attract customers with a cashback offer.
Rather than providing the cashback immediately, introduce a delay of 2-3 weeks before issuance.
Ensure that the cashback comes with a 3-month expiration window, compelling customers to utilize it right after the holiday season is over.
GiftKart can help you give automatic email reminders to your customers regarding the expiration. Also, all the emails are customizable.
Using this approach, you can significantly better your chances of retaining the majority of customers acquired during the busy holiday season, ultimately contributing to your long-term success.
You can use the Giftkart in the same way you used for boosting AOV for retention but make sure to remember:
Activate this cashback offer exclusively during the holiday period.
Set the send date or issue date with a deliberate delay of 2-3 weeks or select a specific future date.
Establish a 3-month cashback expiry window to encourage customers to redeem it.
You must have a list of customers who made a purchase in the past but have since become dormant. The good news is that these customers are highly likely to re-engage and shop during the holiday season, and your store can be their top choice. Here's a strategy to grab this opportunity:
Compile a list of customers who have not made a purchase from your store in the past 3-6 months.
Build an email sequence offering these dormant customers a cashback in the form of a Gift Card for holidays. This not only serves as a gentle reminder about your store but also nudges them to consider your shop for their holiday shopping.
Alternatively, you can provide them with a specific URL that grants a cashback when they spend over a predetermined amount. This is easily doable using Giftkart.
This strategic outreach will re-engage these customers and position your store as a top choice for their holiday shopping needs. This can be implemented right away for upcoming BFCM.
Sunrise Flour Mills initiated a customer winback campaign, issuing cashback of around $60,000. The results they achieved from this campaign, as highlighted in their dashboard, are astonishing.
Key Milestones for Sunrise Flour Mills:
They successfully re-engaged 158 customers within just one week, resulting in the redemption of gift cards worth $1.58K.
They experienced a substantial boost in revenue of approximately $11,000.
they achieved a remarkable 33% surge in their AOV from $60 to $80.
This success story is a compelling example of how Giftkart can effectively re-engage your customer base. To explore how you can achieve similar results for your own store, explore here.
Clearing Out Old Stock with Cashback
Sometimes, your businesses will find itself with surplus or outdated inventory that needs to be cleared out. Cashback can be a powerful tool to clear out this inventory.
Let's say you have a collection of last season's fashion items that you want to move off the shelves. You can create a cashback promotion specifically for these items. Offer a cashback of $20 for every $100 spent on these clearance items. This not only incentivizes customers to make a purchase but also encourages them to spend more to unlock the cashback.
Customers love a good deal, and by using cashback, you can make these older products more appealing. Plus, the cashback acts as an immediate reward, increasing the likelihood of a purchase. This approach helps you clear out old stock while providing value to your customers
Last year, Shopify merchants made a record-breaking $9.3 billion in sales during BFCM! Compared to the previous years, the growth was undeniable. Shopify merchants saw a 24% increase in BFCM 2023 sales, from $6.1 billion in 2021.
In summary, as you prepare for the upcoming BFCM or any holiday season, remember the power of cashback strategies. They can be your key to standing out, increasing sales, and building customer loyalty.
Don't hesitate to customize these strategies to fit your specific needs. And if you ever feel unsure, take advantage of our free audit for expert guidance. With the right cashback strategy, you can make this BFCM season a big success for your Shopify store.
FAQs
1. What are some challenges when running a cashback campaign?
Some challenges with cashback campaigns may include managing cashback costs, ensuring timely payouts, and handling customer disputes.
2. What are some key cashback metrics that I should keep track of?
The cashback retention rate, average order value, customer lifetime value, and return on investment are some of the cashback metrics you should keep track of.
3. How can I avoid cashback abuse?
By implementing strict eligibility criteria, setting limits on cashback amounts, and using fraud detection tools, you can avoid cashback abuse.
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Neetika M
Neetika is the founder of Skai Lama. Passionate about building SaaS, Product Development, and Marketing, she talks about eCommerce Growth, Product Bundling, Gifting, Retention, and Shopify.
Boost Loyalty with Tiered CashBack!
Boost your e-commerce with GiftKart! Branded gift cards, loyalty campaigns, cashback, and more.
Boost Customer Loyalty with Tiered CashBack & Gift Cards
Boost Customer Loyalty with Tiered CashBack & Gift Cards
Increase your e-commerce retention with GiftKart's all-in-one gift card suite! Create branded digital gift cards, run loyalty campaigns, offer cashback, automate growth for holidays, issue store credits, and more.
Increase your e-commerce retention with GiftKart's all-in-one gift card suite! Create branded digital gift cards, run loyalty campaigns, offer cashback, automate growth for holidays, issue store credits, and more.
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