How cash back systems can increase conversion and lower marketing costs

1. How cash back systems can increase conversion and lower marketing costs

2. What is cash back? • consumers can sign up and become members for free. When they visit an online store through the cash back organization, they receive a discount on the products they buy. • What makes this process so appealing for consumers is the fact that they get a discount on all of their purchases, including products that are already discounted. Other than a one-time sign-up at Refunder, they don’t have to do anything else.

3. Snowball effect: • The more companies join in, the more appealing the system becomes for consumers. And the more consumers who sign up, the more appealing we become for retailers. Once you reach a certain size, the effects just keep snowballing until they turn into a veritable avalanche. The system grows automatically because these two principles reinforce each other.

4. Low marketing costs: • The average marketing costs of Nelly Fashion amount to 17 euros per purchase. The majority of this amount goes to Google Adwords. An order coming in through Refunder only costs them 6 euros. “The customers coming in through Google Adwords cost money for Nelly Fashion. The only reason they continue using it is because they hope those customers will visit the site directly in the future. The order they get through us actually make them money,” says Dahlborg.

5. Brand building: • In building a brand, Dahlborg has gained a lot of experience that he could apply to his new company. The pillars of said company are campaigns with people who work at Refunder, encouraging and provoking reviews, and utilizing bloggers.

6. The benefits of cash back for online retailers: • the average order value of cash back shoppers is higher than that of other customers • the percentage of returns is lower • because of these three points, cash back platforms make for very cheap marketing tools • discounts are relatively low, thus preventing brand erosion