Why customers don’t come back (and what it costs)
Without a clear reason to return, customers buy wherever they find the best offer at the time. The marketplace that won them over starts from scratch on the next purchase: it invests again in ads, promotions and discounts for the same customer, in a cycle that costs more than it seems.
According to the classic study by Frederick Reichheld and Earl Sasser, published in the Harvard Business Review in 1990, reducing the customer defection rate by 5% increased profits by between 25% and 85%, depending on the sector: 85% in a bank branch network, 50% in an insurance brokerage and 30% in an auto-service chain.
The impact varies from company to company, but the pattern repeats itself: when customers stay, profits rise.
What is cashback and how does it work in a marketplace?
Cashback is a reward mechanism in which the customer gets back a portion of the value of each purchase, in the form of a balance to use on future purchases.
Cashback in marketplaces follows three steps:
- The marketplace sets the rules: the cashback percentage, the expiry period and the terms of use. The percentage can differ for each seller or category, because cashback is calculated on each seller’s share of the purchase.
- The system awards the balance automatically: the customer receives cashback on every completed purchase, with no manual intervention.
- The customer uses the balance at checkout: on the next purchase, they pay the full amount or just part of it with the accumulated balance, and cover the rest with another payment method, such as MB WAY or card.
As the balance only has value on a new purchase in the marketplace, cashback gives the customer a concrete reason to return.
Cashback vs instant discount: what is the difference?
Both reduce the price the customer pays, but they work at different moments and with different goals.
| Instant discount | Cashback | |
|---|---|---|
| When does the customer get the benefit? | On the purchase itself | After the purchase, as a balance to spend on the next one |
| When is the cost borne? | At the time of sale | The amount is reserved at the time of purchase and only spent if the customer uses it; if it expires, it goes back to the marketplace |
| Effect on customer return | Only if there are new discounts worth coming back for | Strong, because there is a balance waiting to be spent |
| Ideal for | Clearing stock and winning new customers | Building customer loyalty and increasing purchase frequency |
How to use cashback in marketplaces
Follow these six practices:
1. Encourage the second purchase
The second purchase is the moment a new customer becomes a returning customer.
Award cashback on the very first order, so that the customer has a balance waiting when they think about buying again. Show that balance on the confirmation page and in the order email, so they know they already have a benefit reserved for their next visit.
2. Create seasonal campaigns
Periods such as Black Friday, Christmas or back to school concentrate a lot of demand into a short window. Set specific terms for each campaign.
For example, you can set an expiry date shortly after the end of the season, so that customers come back right after the sales peak, instead of losing them until the next campaign.
3. Use the expiry date as a trigger
A balance with no deadline can be forgotten; a balance with an expiry date gives the customer a reason to act.
Remind customers of the amount available and the date it expires, by email or in the customer area, and adjust the period to the marketplace’s purchase cycle: shorter for frequently bought products, longer for less frequent purchases.
4. Let the customer pay just part with their balance
The balance does not always cover the whole purchase, and making the customer wait until they have the full amount leads them to give up.
With partial payment, they use the balance they have and pay the rest with another method, such as MB WAY or card, in the same checkout. This way, cashback never blocks the purchase and the customer sees the benefit straight away.
5. Reward returning customers
In services and subscriptions, the customer already pays regularly, and cashback strengthens that relationship.
Give balance back to those who remain customers and use it to encourage additional purchases or complementary services. Cashback becomes one more reason for the customer to stay with the marketplace.
6. Set cashback per seller
In a marketplace, not all sellers have the same margin. Allow each seller, or each category, to have its own cashback percentage: those with higher margins can offer more, and everyone contributes to the customer’s balance in the marketplace.
What to consider before launching a cashback programme in marketplaces
- Calculate the percentage based on the margins of the marketplace and of each seller, with a value they can sustain on every repeat purchase.
- Agree the rules with sellers: who contributes to the cashback, at what percentage and under what conditions. Include them in the marketplace’s terms and conditions.
- Choose the expiry period carefully: a short period creates urgency, a long period may lead the customer to forget about the balance.
- Integrate cashback into the checkout, so that the balance appears at the moment of payment.
- Communicate the balance in the order confirmation, in the email and in the customer area.
- Measure the results: repeat purchase rate, average order value and the cost of cashback against the revenue it generates.
- Confirm the accounting and tax treatment with your accountant before launching the programme.
Implement cashback in your marketplace with easypay
With the easypay rewards programme, cashback is part of the payment itself, integrated into split payments. On each purchase, cashback is calculated on each seller’s share, and the customer’s balance is held in a marketplace rewards account. You do not need additional apps or separate loyalty systems.
- Cashback set per seller: each seller contributes their own percentage, from their share of the sale;
- Cashback awarded automatically on every purchase, with the expiry period you set, up to 12 months;
- Full or partial payment with balance, combined with MB WAY, card or digital wallets in the same checkout. If the balance covers the purchase, nothing is charged;
- Earn and spend on the same purchase, to keep the customer always in credit;
- Expired balance goes back to the marketplace, so you do not lose the value customers do not use;
- Refunds and chargebacks handled automatically: cashback from a returned purchase is removed with no manual intervention;
- Balance available via API, to display it at checkout, in the confirmation email and in the customer area.
See the rewards guide, find out more about easypay split payments and request a commercial proposal to launch your marketplace’s cashback programme.
Frequently asked questions
Is the easypay cashback programme available to any online shop?
No. easypay cashback is available to marketplaces that use split payments, because it is calculated on each seller’s share of each purchase.
In a marketplace, who pays for the cashback?
Each seller, from their share of the sale. The percentage can differ from seller to seller.
Which payment methods does cashback work with?
Card, MB WAY, Apple Pay, Google Pay, Samsung Pay and in-person payments. It does not work with Multibanco, virtual IBAN or direct debit, because cashback depends on a payment being confirmed instantly.
How long is cashback valid for?
By default, 12 months, which is also the maximum period. You can set a shorter period for each purchase or campaign.
What happens to cashback the customer does not use?
When it expires, the amount goes back to the marketplace.
What if the customer returns the purchase?
The cashback earned on that purchase is removed automatically. If the customer used balance on a purchase that is refunded, that balance is returned to them.