How To Increase Your Bottom Line With A Cashback Strategy

With one simple change in discounting strategy, CrossNet added 600% more to its bottom line without hurting the conversion rate. The co-founder of CrossNet, Chris Meade, shared the secret on LinkedIn.

They switched from a $20 off signup discount to a $20 cash-back offer. Sounds simple and not that impactful, right?

Here’s the thing: Crossnet customers only have a 15% redemption rate on the cash-back reward.

Here’s how it helps Crossnet:

1. Margin

CrossNet benefited from the lift in conversion rates due to the discounting while still retaining a significant portion of those discount margins. Even if the redemption rate of the discounts was higher than expected, given their AOV is higher than $20, they would still have an upside to their bottom line compared to simply offering a $20 discount upfront.

2. Brand image

CashBack also benefits CrossNet’s brand image. Discounts are often seen as a reduction in the value of the product that erodes the brand value, whereas CashBack offers are seen as a direct benefit to the customers, something the company offers to show their appreciation.

3. Customer Loyalty

Unlike one-time discounts, cashback gives customers a reason to come back and make a 2nd purchase. Customers who made a second purchase are 54% more likely to make a third purchase than those who only made one purchase. Cashback helps boost customer retention and LTV.

There’s a potential downside to using CashBack. Discounts tend to be more effective at driving immediate purchases by creating a sense of urgency, while CashBack offers are more effective at building long-term loyalty.

Surprisingly, Chris said the cashback offer also led to a massive lift in CVR for them. This is just one more reason to A/B test this offer yourself.