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Is the Cashback Promotion Right for Your Business?

Posted on 7.27.2014

Whether they’re from paper catalogs or in-store purchases, consumers love getting a deal.

One of the most popular promotions used by brands today is the “cashback” promotion. Cashback works by giving consumers a certain percentage or dollar figure off their orders after their total exceeds a set amount.

However, two of the main questions that companies have regarding the promotion is whether or not cashback sites have any added, or incremental, value as well as how consumers are getting to cashback sites. (In this case incremental value means sales that the advertisers would not have made without the promotional activity of the cashback site.)

According to a recent whitepaper from Matt Swan, a client strategist at Affiliate Window, nearly 90 percent of all transactions only have one referrer. In fact, Swan said that just more than 94 percent of retail sales have only one interaction with an affiliate referrer.

“There is a common misconception that each transaction will involve a number of affiliate interactions,” said Swan. “This is extremely wide off the mark with typically 90 percent-plus of transactions only having a single referrer. Although this can vary from sector to sector, recent research has shown this to be case across a number of sectors.”

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After analyzing how consumers arrived at cashback sites, what their experience was while on the site and what the total price of their orders was Swan stated that he believed cashback sites are a worthy investment for companies.

“…cashback sites are able to be used strategically to drive not only impressive volumes of customers, but also valuable ones. The click path data for cashback sites as well as their average order values has demonstrated their ability to drive incremental value,” said Swan.

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