Why Modern Retailers Are Choosing Cashback Over Traditional Discounts

Why Modern Retailers Are Saying Goodbye to Traditional Discounts

Traditional discounts have been a cornerstone of retail strategy for decades — a reliable way to drive traffic, move inventory, or create urgency. But over time, something’s shifted.

Many merchants are finding that the same tools that once boosted sales are now creating new challenges. Discounts, especially when used frequently, can become less effective — and more costly. They may be driving volume, but at the expense of margin, brand value, and long-term loyalty.

The Discount Dilemma

The problem isn’t just financial. It’s behavioral.

Frequent discounting trains customers to wait. Instead of buying when they want something, they hold out — expecting the next deal. That delay can lead to missed sales, lower average order values, and a margin structure that’s constantly under pressure.

This dynamic creates a cycle that’s hard to break:
offer a discount to drive purchases → customers wait for the next one → offer deeper discounts to trigger urgency → erode margin further.

Cashback: A Way Out of the Cycle

Cashback offers a different path. Rather than devaluing the product, it adds value to the experience — rewarding the customer for purchasing now, while giving them a reason to return.

It’s not about withholding value — it’s about reframing it. With cashback, customers still feel like they’re getting something back. But instead of eating into your bottom line immediately, the value is earned and tied to future engagement.

- Customers are encouraged to act now, rather than wait.
- They return more often, because they have something to come back for.
- Merchants can structure rewards in ways that protect margin and grow average order size — for example, by requiring a minimum spend to redeem cashback.

Real Results, Not Just Theoretical

A Toronto-based paint store made the shift from traditional discounts to cashback with trovy. The outcome? A 160% lift in incremental spend among customers who returned to redeem their cashback — and a meaningful increase in repeat visits.

Customers didn’t just like the reward — they came back to use it. And when they did, they often spent more than they had on their first visit.

Moving Toward Smarter Loyalty

This isn’t about dismissing discounts entirely. They can still serve a purpose in the right context. But for businesses focused on sustainable growth and stronger customer relationships, cashback offers a way to shift from short-term incentives to long-term loyalty — while keeping profitability in mind.

It helps customers get what they want, faster. And it gives merchants more control over how and when value is delivered.

Cashback changes the game — not by pushing harder, but by aligning incentives. It’s loyalty with purpose, and it’s helping forward-thinking retailers build more resilient businesses.

Ready to break the discount cycle?
Book a quick call today and see how trovy can help you turn cashback into your most powerful loyalty tool.