Retailers often reward customers with money-back vouchers, but a recent study suggests they may be better off giving them company stock.
The study looked at data from US fintech company Bumped, which opens brokerage accounts for users and then links them to their credit card accounts. When customers spend at a particular store, they get a fraction of their spending in the company’s stock in their brokerage accounts.
Traditional cashback loyalty programmes are effective; one study found when an additional $1 in cashback payment is offered, spending increases by $3.51.
Cash
However, giving customers company stock is even better. Instead of increasing their spending by $3.51, customers upped it by $23. Weekly spending at company stores jumped 40 per cent and stayed “persistently high” for up to six months.
Why? The study found 68 per cent of users reported feeling more loyal to companies they owned stock in, with 40 per cent reporting a more “positive attachment” to these companies.
In other words, public retailers should forget about cash refunds – give customers stock instead.
