The strength of the offer and popularity of the sites has lead to questions being raised about what stage of the decision-making process the cashback sites influence.
Decision making is an area that difinitive answers will always be hard to justify. The debate about how rational customers are, and whether you can really map consumer behaviour and decision making, is a wide ranging issue where it is hard to ever reach a truly conclusive answer. The increase in online purchasing has created new influences for marketeers to consider.
Do cashback sites purely influence the channel they purchase through? Or does it play a part in which brand they select? Do cashback sites help to originate purchases? Or do they simply cannibalise existing sales by offering a monetary reward?
TopCashBack, the UK’s largest free cashback site, recently commissioned research by an independent third party to gain a better understanding of the part that cashback sites play in the decision making process. This research interviewed 755 cashback users of any cashback site. A user was defined as a person who had used a cashback site in the last 12 months.
The results help to give more information on where the sites fit into the overall decision-making process for cashback users. To illustrate this, a simple decision-making process is included below (figure 1.1). There are more detailed models available and the debate continues over whether one can really reduce decision making to rational and sequential steps, but this model gives something to hang the research on.
Figure 1.1 Decision making process Adapted from Kotler (2005)
The perception of cashback sites can often be that they are converters of traffic, involved in the purchase decision stage. At this point a user has looked at the products that they want to purchase and now needs to decide the channel and make the purchase. The results of the survey suggest this is not always the case. 47% of respondents said the cashback was more important than the brand. This lead to 52% using brands they had never considered before to make a purchase (figure 1.2).
Figure 1.2 To what extent do you agree or disagree with the following? N=755
This would put cashback towards the beginning of the decision making process for some cashback users. It could be argued then that cashback sites are included within the ‘Information Search’ stage, as users look at the different alternatives possibly extending their evoked set. They then move to the ‘evaluation of alternatives’ factoring in the cashback that they receive on purchases. This is supported by 32% saying that they begin research at cashback sites (figure 1.3).
Figure 1.3 Thinking about a purchase in general now, which of the following statements apply? N=755
Further interesting findings are that 25% of users said that cashback sites help to give ideas when it comes to purchasing products. This could therefore put cashback sites at the ‘need recognition’ stage. For example, pushing exciting cashback rates on TV’s in May (before the Olympics or Euro 2012) could help create a perceived problem that would begin the decision making process. There is obviously even greater potential for smaller value products or services.
Lower value products can often have a shorter decision making process due to the decreased risk involved. After purchasing a product, customers will evaluate their decision (post purchase behaviour). Higher value products can be more likely to result in cognitive dissonance (when they feel discomfort with their decision) due to the higher expense or perceived risk of the product. This often leads to a longer decision process to try to avoid the feeling of dissatisfaction. However, a lower risk product or service is likely to benefit from short promotions with a strong call to action.
A good example would be a brand like Netflix. They offer a one month trial with no cancellation cost minimising the risk for new customers. Promoting the key benefits of the service alongside the cashback incentive could help to create a need that was not there, helping to drive incremental sales. The lower (perceived) risk of this kind of product would also bring about a higher likelihood to take out a trial subscription and a shorter decision making process.
Suggestions for working with cashback sites
Based on the research, short term promotions are likely to help gain market share when promoted at the correct time for particular products. Pushing strong messages in January for travel for example, will result in putting your brand in front of consumers when they are in information search stage. For products that are not affected by seasonality, short term promotions can help to create need recognition by putting offers in front of cashback customers. The short-term nature of the promotion can help to create a stronger call to action.
With more considered purchases, where there is likely to be a longer decision making process, it could help to have a rate for a slightly longer period (for example 2 weeks) so that the call to action is there, but also fits into a slightly longer decision making time. This can also help the merchant to retain visibility for longer during important trading times.
Do not just consider cashback sites to be drivers or convertors of sales. With sites offering branding opportunities alongside original and unique content, they can play a big part in building brand recognition and top-of-mind awareness. The members that these sites can put you in front of can assist in putting you into the evoked set of brands that the consumer may be considering.