Cash Back optimizes performance

Shutterfly proves the effectiveness of Cash Back

Brands often ask us what’s the best Cash Back rate to power optimal performance against their business targets. Any decision to increase or decrease Cash Back rate impacts margins and gross profit. Whether or not it makes sense to offer a higher Cash Back rate depends on demand elasticity – whether the increased lift from a higher rate is sufficient to compensate for a lower sales margin.

This case study reveals how Shutterfly and Rakuten collaborated to get rich elasticity insights that helped it optimize future marketing efforts.

Background

Shutterfly is a long-time Rakuten client with a highly disciplined, data-driven approach to marketing decisions. To ensure the best possible results in Q4 2022, Shutterfly wanted to identify the optimal Cash Back rates for driving their core business metrics. The brand could make smarter decisions to drive sales and protect margins by identifying the most efficient rates for motivating action.

We created an in-market test that exposed different Cash Back rates to customers to determine their effects on awareness, shopper and buyer lift, gross merchandise value (GMV), and new-to-file lift. Based on this data, we could set the best rates to achieve their future business goals.

Our Testing Approach

We worked closely with Shutterfly and their agency team to identify a testing methodology that would expose different sets of customers to different Cash Back rates. Each group in the test was exposed to one Cash Back throughout the test period. We measured the effect of that rate on a variety of business metrics. Our test design leveraged three different Cash Back rates, 5%, 8%, and 10%.

To ensure there was no bias in sample selection, we leveraged the industry-leading third-party tool Optimizely to conduct the test. The audience for the test was selected from past Rakuten shoppers exposed to one of the Shutterfly Cash Back offers for 15 days. We also tested different Rakuten media across each sample to deliver actionable media strategy insights.

Results

Cash Back is an effective performance lever

The study results provided many valuable conclusions for the Cash Back strategy. On awareness, increases in Cash Back drove significantly higher awareness than the “base” 5% rate, but 8% and 10% Cash Back drove similar awareness increases. From this, we concluded that when awareness is the top goal for a program, 8% is the most prudent Cash Back level.  

The study also demonstrated that increases in Cash Back rates dramatically impacted GMV. Increasing Cash Back by three points to 8% boosted GMV by 21 points. Increasing Cash Back by 5 points to 10% delivered the most significant increases in gross merchandise value – 38 points higher than the base rate.  

We also measured customer acquisition success at different Cash Back rates. Moving the rate from 5 to 8% almost doubled the lift in new-to-file customers. But increasing it to 10% nearly tripled the new-to-file lift. 

Regarding Shopper Lift, which measures the number of people who engage in shopping trips (whether or not they convert), 8% and 10% drove more than 4X the number of trips as the 5% Cash Back rate. But 8% and 10% delivered very similar lifts, indicating that 8% is sufficient to increase shopping occasions.  Finally, Buyer Lift, saw a significant 21-point increase in conversions from the 8% rate over the 5% rate and an additional 6-point lift at the 10% rate. 10% closed significantly more shopping trips than 8%.

Key points

• Cash Back is an effective performance lever and a strong catalyst for purchase.
• Cash Back improves GMV and NTFs in an impressive, linear fashion
• Elevating Cash Back from 5%–8% drove significant uplift in shopping trips, while conversions exhibit an even higher growth at 10%
• Rakuten drives incremental growth while maintaining positive ROAS

Ready to learn more? Reach out to your Rakuten rep today.