CashBack vs. Coupons: Which is Best for Your BFCM 2023 Promotion?

Are coupon codes cutting into your profit? Traditional percentage-based promotions are a common choice for brands, but there’s a better alternative to consider: CashBack offers.

Rather than offering a standard blanket discount on your products, CashBack enables you to offer a more compelling discount to shoppers while improving profit margins. With Black Friday and Cyber Monday (BFCM) right around the corner, right now is the perfect time to break free from your coupon-based habits and see how CashBack can ramp up your BFCM campaigns.

How Coupon Codes Deflate Profits

We get it – discounts work like magic when drawing in shoppers during the BFCM sprint. Consumers have come to expect percentage-off deals during the post-Thanksgiving rush. 

But when you look past the high-level engagement, it’s clear that your business leaves profit on the table by sticking with coupons. Let’s dive into the numbers to see how it breaks down:

Brand A runs a BFCM 20% coupon code:

• Sales: $100k
• Coupons Given Away: $20k
• Revenue Retained: $80k

Brand A keeps $80k as revenue.

Why CashBack Offers Drive Revenue

Walking away with $100k in sales and $80k in profit may sound like a win at first glance. But what if you could plan for better results? Let’s contrast this scenario with a CashBack offer:

Brand B runs a BFCM 20% CashBack offer:

• Sales: $100k
• CashBack Offer: $20k
• Cash Redeemed: $6k
• Site Credit Redeemed: $4k
• Unclaimed CashBack: $10k

Brand B keeps $94k as revenue.

That’s right – a staggering 14% difference in profit margin! When brands using Fondue are able to offer CashBack, 30% of customers redeem through a Prepaid Visa (aka cash), 20% redeem as site credit to the brand (driving future purchases), and 50% often do not claim it. You can maximize revenue while offering attractive discounts for new and returning customers.

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Unlock New Revenue Streams with CashBack

Since CashBack offers have lower redemption rates than coupon codes, Brand B could increase their offer to 30% to win over even more customers and come out ahead of Brand A.

Looking at the data from brands that offered CashBack through Fondue over the last BFCM in 2022, redemption of site credit went up by 50% compared to the rest of the year. When digging further to find out why, we discovered that shoppers were sending that site credit to a friend or used it to do their holiday shopping in December, boosting your revenues even further.

Looking for some recommendations ahead of BFCM? Here are 3 from our top customers:

1. Implement CashBack caps – Capping your CashBack promo for BFCM to 50% will maximize value without a profit risk.

2. Deploy tiered CashBack offers – Tiered offers give customers a higher CashBack percentage for spending more on their purchases.

3. Ensure your popups run smoothly – A surge in website traffic is a unique chance to grow your SMS list by as much as 30%, in turn driving repeat sales opportunities in the future. Site visitors are primed and ready to get a deal in exchange for their contact information.

With BFCM approaching, there has never been a better time to test drive CashBack. Harness the power of an innovative discounting alternative and make this BFCM your most successful yet.