How cashback strategies yield financial benefits for retailers: The mediating role of consumers’ program loyalty

As consumers heavily rely on price to make purchases, cashback rewards apps are termed as a strategy in the retail context. Accordingly, retailers are increasingly using price strategies based on providing cashback back to develop loyalty programs. However, retailers have little insight into how different cashback price strategies, such as cashback generation and cashback redemption, yield loyalty and financial benefits for them. Using a conceptual framework, the authors link cashback price strategies to consumers' loyalty towards the program, which in turn boosts consumers' average purchase amount and retailers' revenues. The analysis uses time-series data from a cashback program merged with retailers' revenues and consumer average purchase amount. Results demonstrate that cashback generation and retention increase consumer's loyalty towards the cashback. Second, program loyalty is a strong driver of customer average purchase and retailing revenues. Third, retailers can use cashback generation and retention for increasing firm’ performance by evoking consumer program loyalty.