Launching a cashback loyalty program to maximize customer engagement

Driving customer engagement with loyalty programs

Cashback rewards programs are helpful for driving customer engagement — among both new and loyal shoppers. With a cashback program, customers can receive a percentage of money back on eligible purchases. They can then save and spend that money on a future purchase, increasing their engagement with the retailer.

Gen Z and Millennials, in particular, are likely to feel they’re “getting something for free” if they buy a gift using rewards.¹

Additional benefits of cashback loyalty programs for businesses

Along with increasing customer engagement, enterprises can access a range of benefits from cashback loyalty programs, such as:

• Increased revenue. Incentivize customers to spend more by rewarding them for each purchase. Depending on your rewards structure, you can motivate customers to unlock new cashback benefits by hitting different spending tiers. Also, inspire shoppers to invest those rewards back into your business with redemption options like gift cards and special offers on certain products. In one survey, 39% of consumers made an impulse purchase to earn more rewards.²

• Improved customer retention. Rewards programs can help customers feel valued and appreciated, enhancing satisfaction, loyalty, and retention. They can also help shoppers get more from their purchases and increase spending efficiency, a critical point as one report found 88% of US customers surveyed would switch brands to save money.³

• Access to valuable data. Use the data from your cashback program to learn more about the preferences, demographics, and behaviors of your most loyal customers. You can then use this data to better personalize experiences to meet their needs and target potential customers with similar attributes.

Designing a cashback program

There are two core components of successful cashback benefits programs. It’s important for each business to tailor these components to their audience behaviors and program goals:

• Rewards structure. Determine the percentage of cashback rewards customers will receive, along with any eligibility criteria for receiving those rewards. For example, customers might receive 2% cash back on purchases from certain product categories, like groceries, travel, or electronics.

• Redemption options. Decide how customers can redeem their rewards, such as by receiving cash deposits, discounts on future purchases, or gift cards.

Selecting the right technology platform

Before launching your program, it’s important to evaluate and choose a suitable management platform for your enterprise.

Your loyalty program management software should offer certain capabilities, such as:

• Integration with existing platforms. Seamlessly sync your loyalty program software with current payment systems and customer relationship management platforms.

• Real-time data collection. Access real-time analytics and reports about customer engagement, behaviors, and revenue to optimize strategies.
• User-friendliness. Allow customers to easily manage and redeem their cashback rewards. With the new PayPal CashPass, for example, shoppers can receive personalized, AI-powered cashback offers from top brands in the U.S.

Best practices when launching the program

Once you’ve set the terms for your cashback loyalty program, you can take these steps to spread the word among new and current customers, and start driving results:

• Initiate a soft launch
• Develop a rollout plan
• Start promotional activities

Initiate a soft launch

Consider a soft launch to test the new cashback program with a select group of customers. Gather data from this soft launch to better understand how customers engage with the program and which aspects are or aren’t working. Use this data to answer questions such as:

• Are customers able to easily sign up for the rewards program? Which platforms are they using to sign up?
• At what point(s) during the buyer journey are most customers opting into the program?
• Which spending categories are driving the most cash back?
• Do customers understand how to access, manage, and redeem their rewards?
• How are customers choosing to redeem their rewards? Are any redemption options more popular than others?
• Is the program successful at increasing engagement and revenue?

Develop a rollout plan

Design a comprehensive rollout plan to make the program accessible to all customers. This rollout plan should include:

• Timelines for making the program public. Will the program be available to everyone at once or will it launch in phases? For example, you might offer the program to current and loyal customers first, and then introduce it to new customers.

• Training for employees. How will sales, marketing, communications, and customer service representatives be trained to help customers sign up for and navigate the cashback loyalty program?

• Objectives and milestones. What do you hope to accomplish with the rollout plan? For instance, your goal might be to increase new customer engagement by a certain percentage within the first year or to drive a certain number of signups by the end of the first quarter.

Start promotional activities

Help customers learn about your cashback loyalty program with the right promotional activities and marketing strategies, such as:

• Email alerts. Send notifications and reminders to email subscribers, letting them know how to sign up for your cashback program.
• Social media ads. Get in front of new audiences with targeted social media placements advertising relevant products and cashback offers.
• Sign-up bonuses. Incentivize customers to sign up with limited time cashback bonuses.
• Personalized offers. Meet shoppers throughout the buyer journey — such as on your app and at checkout — with customized product offerings about cashback deals.

Using PayPal as an advanced offers program

PayPal provides next-level tools that today’s enterprises can use to help personalize and transform the commerce experience.

With PayPal’s new advanced offers platform, businesses can reach customers with targeted cashback rewards and product recommendations right on the PayPal app. Retailers can even deliver personalized offers after checkout with PayPal Smart Receipts — helping to further increase engagement and entice customers to come back again and again.

Start revolutionizing customer experiences with PayPal’s new advanced offers program.