Ditch the discount codes. Drive profitable growth with CashBack.
With the BFCM sprint right ahead of us, the team at Fondue sat down with our SMS marketing friends over at Postscript to analyze key discounting predictions within the e-commerce space.
In this predictions report, we run through discount timing, integrating CashBack into campaigns, discount strategies from last year's BFCM, and the most popular discounting offers this year.
According to Mike Manheimer, CMO at Postscript, CashBack represents a massive untapped opportunity for brands to extend the holiday season. In his words, brands want as many sales as they can get over BFCM, but they still have the December holiday season ahead and tons of time before the shipping cut off date.
Using CashBack, Mike adds that “brands can not only offer something really compelling to get that BFCM sale, but they can also market to their customers with the store credit that they have built up to either buy more in December or use their CashBack to buy someone else a gift.” In short, CashBack can turn a meaningful percentage of brands’ BFCM purchasers into December buyers while creating a legitimate incentive to come back and shop again.
Adam Schaechter, Senior Sales Manager at Postscript, points out that the brands that innovate the fastest, tend to win. From his lens, the data is clear that CashBack is the winner when compared to implementing a standard discount offering over the upcoming BFCM sprint.
According to Rally Stanoeva, Senior PMM at Postscript, brands that are using CashBack offers during BFCM will benefit from a compounding effect in December. In her words, “ a significant percentage of shoppers choose the site credit option for how they want to redeem their CashBack. Then they use that site credit to do their holiday shopping in December.” Zooming out, this strategy is a clear win-win for both the shopper and the brand implementing CashBack.
In 2023, many merchants switched their focus from top line growth to a focus on contribution margin and profitability. As a result, Mike points out that we’re seeing a lot more bundling and tiered discounting strategies as opposed to just flat out massive sitewide discounts. In his words, “merchants are a bit more focused on where they can actually afford the margin hit from discounting.” Notably, he’s also seeing more gift with purchase offers due to a focus on margins.
Adam predicts that CashBack in particular is going to be one of the biggest changes year over year. From his POV, the tooling is finally built out in a way that brands can use it more consistently and easily than ever before.
Rally adds that the e-commerce industry as a whole will likely be more discount-sensitive this year. In her words, “a lot of brands are paying closer attention to their profit margins as COGS are rising.” As a result, these brands might not be willing to increase their discounts compared to previous years, opting to keep them the same or even to lower them slightly.
From a discount popularity standpoint, Mike believes that a lot of brand operators will get creative with bundled offers this year. In turn, he expects to see steep discounts when buying multiple products at once or multiples to keep one and gift the rest. He adds that we’ll likely see brands be very conservative with discounting because of rising costs and decreasing margins.
According to Adam, he’s already seeing a ton of compelling gift with purchase promotions across Postscript customers and elsewhere within the e-commerce market. From a discount popularity lens, he notes that “customers have come to both love and expect a big % slash on their favorite brands site,” and specifically predicts that this trend will continue this year.
On a final note, Rally specifically predicts that most brands will stick to the tried and true sitewide % off, but that we’ll also see tiered discounting grow in popularity over the BFCM season this year, with brands aiming to make their discounting more profitable.
In Mike’s words, “I recommend people experiment with CashBack this year.” Why? It preserves your margins upfront, which is fuel for your P&L, while also giving your customers a reason to come back later in the holiday season. In addition, because margins are more protected with CashBack, brands can offer even more enticing CashBack offers to their customers over time.
In terms of creative discounting, Adam points out that Fondue’s CashBack is an easy win for brands that have never experimented with the tool before. From the customer side, they often get a better deal and from the brand side they’re getting a better margin. In his words, “it’s a clear win-win.”