Why Cashback Offers Appeal to Consumers

You’re eyeing two smartphones on a store shelf. One’s a beautiful piece of design and a status symbol, promising fun and excitement. The other is the epitome of functionality, boasting an extended battery life and features designed to simplify your daily tasks. This decision—based on desire versus practicality—captures the broader tension between hedonic and utilitarian values that consumers grapple with regularly.

As marketers, we can’t forget the power of balancing utilitarian and hedonic benefits in our promotional strategies. With cashback promotions, understanding this balance helps us create offers that resonate with customers on a practical and emotional level. Let’s see what this looks like:

Savings (Utilitarian): Like discounts, cashback promotions offer direct savings, enhancing a purchase’s economic value.

Deferred Savings (Utilitarian): While the savings from cashback promotions might not be immediate, they offer future value, which can appeal to customers’ long-term financial planning.

Reward for Spending (Both): Cashback promotions effectively reward customers for their spending, making the purchase experience more satisfying.

Sense of Winning (Hedonic): Although it’s essentially a form of discount, cashback can create a sense of ‘winning’ or receiving a ‘bonus’, adding an emotional appeal.

By focusing on both types of benefits, we can ensure our promotions drive purchases and create a positive and satisfying shopping experience. However, the importance of each factor can vary based on the promotional offer’s specifics and the target audience’s preferences and priorities. If you want to learn more about how to balance hedonic and utilitarian marketing and delve into real life examples, have a look at this blog post.

Increasing Cost of Living

Over the past few years, inflation and increased cost of living have hit consumers hard, with prices of goods 31% higher today than in 2020.

Consumers are more cautious about spending their money in this challenging financial climate. Cashback offers provide much-needed relief, offering greater value for their money and aligning with their personal needs and financial capabilities. They tend to prioritise purchases that provide added benefits such as quality and durability.

Unlike instant discounts that immediately lower the price and might make a product seem cheaper in quality, cashback offers keep the product’s original price, which helps maintain its high-quality image. When implemented correctly, cashback promotions become a compelling incentive that stimulates sales while avoiding the risks that come with less strategic discounts.