UPDATED FOR 2021

Barely a day goes by without news reports on the financial impact of Brexit, the slowdown caused by the pandemic and the falling value of the pound. Indeed, companies which import goods or components have been feeling the pinch for some time and never more so than now.

For brands and retailers, the problem cannot be fixed through the simple economics of higher costs = higher prices. Maintaining or increasing prices is difficult at the best of times, let alone at present when consumers are ££ sensitive; have huge buying options and are more able than ever to shop around for the best deals online.

For marketers, the choices are stark: absorb the increased production costs to maintain market share, or risk losing customer confidence by offering price discounts and 2-for-1 deals to hit like-for-like sales targets. Without a doubt, both are bad news for the bottom line.

Meeting the challenge

Retailer marketers certainly have a challenge on their hands, and are understandably looking to brands to come up with creative solutions which can be implemented with speed.

They’re asking: what’s the best way to protect our investment in brand value? How can we maintain value perception without losing customers who won’t pay more? How do we compete on price without further pushing the marketing into a discounting quagmire in which nobody wins?

Engaging customers through promotions

Promotions are an increasingly important part of the answer for brands trying to balance increased cost of production with pricing pressure from retailers and consumers.

And one of the most effective options we’ve seen in the last few years is the use of cashback promotions.

Cashback promotions are a tried-and-tested way to sell products at full price, helping to maintain the value perception of a brand by rewarding the consumer for their loyalty with a cash payout in return for proof of purchase or a full refund if the customer isn’t happy with their purchase.

The benefits of cashback promotions

– Good for customers who can continue to buy their chosen brand and receive an added value offer direct to their purse or wallet or de-risk their purchase.
– Good for retailers as they serve to keep prices at the original level, gaining more profit than a tactical discount.
– Good for brands which want to preserve their value proposition and compete on terms other than price. Cashback promotions can appeal to a price-sensitive customer who would otherwise consider a competitor or who might need reassurance if trying a new brand for them.
– Good for the overall marketplace – instead of building a spiral of price alterations, consumer confidence is maintained, giving long-term benefit to retailers, brands and consumers alike.

Furthermore, because this promotion mechanism captures valuable customer data, it paves the way for future marketing to a customer who is already engaged with the brand.

Running a cashback promotion

The idea of a cashback promotion is relatively straight-forward – you offer to pay consumers after they have made their purchase upon provision of a valid receipt or after return of their product.

However, as always, the devil is in the detail, and a cashback promotion can become complex and unwieldy, especially if it’s being run across multiple territories requiring different languages and involving a myriad of currencies or handling and validating returns.

This is where NDL can really help.  Our promotional technology platform, Promotigo™, enables a UK-wide cashback promotion to be up and running within a month, and a global, multi-lingual campaign to be ready within weeks. We can also handle returns, validation and in some cases resales. Importantly, by paying out in the local currency, we can even make the exchange rate work in favour of a campaign.

What to do next

Promotigo™ can be used to manage every aspect of a cashback campaign and is fully scalable for local or global use. To find out more or to discuss the use of Promotigo™ for your next cashback promotion, please get in touch on 0207 428 3090.

You may also like to sign for our free NDL Promotions mini-course to find out how to get the most from your promotions and which promotional mechanics are best suited to your business objectives.

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