Cashback vs Buy Now, Pay Later: Revolutionizing Retail Loyalty
It's crucial to understand the Australian context. According to recent data, over 60% of Australians find cashback rewards more influential than points when making purchase decisions..
In the ever-evolving world of retail, two major trends have emerged as game-changers for both consumers and businesses: cashback rewards and Buy Now, Pay Later (BNPL) services. While both aim to enhance the shopping experience and drive sales, they operate on fundamentally different principles. Today, we're diving deep into how next-generation cashback programs, like the one offered by Propi NZ, compare to BNPL services, and why they might just be the future of retail loyalty.
Australians Prefer Cashback vs. Reward Points
A case study from IPN: Toys IPN Campaign Performance
iBotta runs FMCG cashback programs in the USA. Here are some interesting findings.
November 9, 2023 https://ipn.ibotta.com/resource-hub/toys-ipn-campaign-performanceDaily Sales Lift
Purchase Cycle Reduction
YoY Units Sold Per Customer
Cashback vs. BNPL: A Cost Comparison
One of the most significant differences between cashback programs and BNPL services lies in their cost structure for retailers:
- Cashback Model: Typically costs retailers 2-4% per transaction
- BNPL Model: Often charges retailers 5-6% per transaction
Immediate Gratification vs. Delayed Payment
Another key distinction lies in the timing of benefits:
- Cashback: Offers immediate tangible benefits to customers, potentially driving more immediate sales and repeat business.
- BNPL: Allows customers to delay payment, which can be attractive but doesn't provide an immediate reward.
Fostering Customer Loyalty
Both cashback and BNPL aim to increase customer loyalty, but they do so in different ways:
- Cashback Programs: Can foster stronger customer loyalty as consumers may prefer to shop where they earn rewards. The promise of earning money back on purchases creates a positive association with the brand.
- BNPL Services: While they offer convenience, they don't necessarily tie the customer to a specific retailer. Customers might use BNPL across various stores without developing strong brand loyalty.
The Innovation Factor: AI-Driven Cashback
What sets next-generation cashback programs like Propi NZ apart is their innovative use of technology. Here's how they're pushing the boundaries:
- AI-Powered Receipt Recognition: Propi NZ is the first and only company in Australia to use AI for recognizing and validating physical receipts. This breakthrough allows for a seamless cashback experience even for in-store purchases.
- Personalized Recommendations: AI algorithms suggest products that shoppers might like next, enhancing the shopping experience and potentially increasing sales.
- Data Analysis for Retailers: The platform provides valuable insights to retailers and mall operators about consumer buying habits, something that's been largely unavailable until now.
The Fun Factor: Cashback Raffles
Propi NZ adds an extra layer of engagement with its cashback raffles. Customers can earn free raffle ticket entries with their purchases, with prizes up to $999 a day. This gamification element adds excitement to the shopping experience, potentially driving more sales and repeat visits.
The Bottom Line
While BNPL services have their place in the market, next-generation cashback programs offer a compelling alternative for both retailers and consumers. They provide:
- Lower costs for retailers
- Immediate rewards for consumers
- Stronger potential for building brand loyalty
- Innovative use of AI for a seamless experience and valuable data insights
- Added engagement through gamification elements like raffles
As we move forward, it's clear that cashback programs like Propi NZ's are not just competing with BNPL services – they're reimagining the entire concept of retail loyalty.