Today’s consumers are a bit like “loyalty wanderers” – always on the lookout for the best deals and offers. It’s a constant battle for businesses to capture and retain their attention. 

Therefore, loyalty programs are becoming more popular than even in Singapore, especially in the f&B industry. Although there are many ways to reward and engage your customers, the two strategies that have become the talk of the town are discounts and cashback.

For the customers, both discount and cashback are fantastic because they get more value for the money that they spent. But for business owners, the big question is: which strategy is good for them? Which strategy can bring in more repeat customers and boost sales? And, most importantly, which strategy is the most profitable in the long run?  Dive into this article to unravel the answers and gain a deeper understanding of these game-changing tactics.

Difference between Discount and Cashback

Discount and cashback are both strategies used by businesses to incentivize customers. The customers feel rewarded, and therefore engage with the business more often, eventually becoming loyal customers. 


A discount is a reduction in the original price of a product or service. It is typically applied at the time of purchase, resulting in an immediate reduction in the amount you need to pay. The discount can be in the form of a percentage off the original price or a fixed amount deducted from the total.

For example, if an item originally costs $100 and there is a 10% discount, you would only need to pay $90.


Cashback, on the other hand, involves receiving a portion of the purchase amount back as a refund or credit after the transaction is completed. It is usually offered as a percentage of the total purchase price.

For example, if a cashback program offers 10% cashback and you make a $100 purchase, you would receive $10 back.

Cashback provides an opportunity for customers to accumulate savings over time, especially if they frequently make purchases or participate in loyalty programs. It offers flexibility in how the savings are utilized, making your customer have more control over their rewards.

Read how cashback can be a customer magnet for your business.

What are the benefits of discount & cashback to a Business Owner?

While both rewards bring value to the customers, they operate quite differently in the backend and can have varying long-term profitability for business owners. Behind the scenes, the mechanics of discounts and cashback diverge, and understanding these nuances is crucial for business owners to make informed decisions.

To better understand the functioning of discounts & cashback, we will first define 5 critical criteria:

  1. Customer Attraction: How do discounts and cashback strategies attract customers to a business?
  2. Customer retention: How do discounts and cashback strategies help in fostering long-term loyalty to keep existing customers coming back for more?
  3. Data Collection and Marketing: How do discounts and cashback aid businesses in gathering customer data for targeted marketing purposes?
  4. Cost Considerations: How do discounts and cashback impact a business’s costs and profitability?
  5. Competitive Landscape: How do discounts and cashback initiatives position a business in the competitive market?
Customer Attraction Discounts are great to attract New Customers. They can get your prospective customers to try your product/service. Cashback does play its part in attracting new customers, as it lets them accumulate “cash” in their accounts to be enjoyed in the future transactions.
Customer Retention As the discount is enjoyed in the same translation, it does not play any role in customer retention. Cashback is great to retain customers, and foster customer loyalty by rewarding repeat visits and purchases.
Data Collection and Marketing As customers have already availed the discount, they may choose to not share their data. As cashback is accumulated in the customer's account, it provides an opportunity to businesses to collect customer data. Customer information such as name, email or phone numbers can be used for marketing campaigns in the future.
Cost Considerations Discounts directly reduce your revenue per transaction, impacting immediate cash flow. Cashback involves returning a percentage of the revenue after the purchase, allowing for more predictable cash flow.
Competitive Landscape Discounts are most common and prevalent in F&B Industry in Singapore. A cashback program will differentiate your business and attract customers who prefer the long-term benefits of earning cashback.

As a business Owner, which strategy should you have?

As a business owner, the ultimate strategy to have is a cashback program. It’s a definite game-changer, especially for F&B businesses. By implementing a cashback program, you can build a loyal customer database that will keep coming back to your restaurant, cafe, or bar for the long haul. These customers become your profitability anchors, as you won’t have to splurge on hefty marketing campaigns or instant discounts to entice them. Instead, they’ll return regularly to redeem their cashback rewards while earning even more in the process.

But here’s a savvy tip: why not have the best of both worlds? You can combine a small discount or offer a free drink to attract new customers initially. Once they’re hooked, sweeten the deal by offering them cashback for their future visits. It’s a winning combo that will keep your customers happy and your business thriving. So, make that smart move and cash in on the power of both strategies!


Cashback programs not only attract new customers but also foster long-term relationships with a strong and loyal customer base. By offering customers the opportunity to earn back a portion of their spending, businesses create an attractive proposition that keeps customers coming back for more. The benefits extend beyond immediate sales; they include data collection, targeted marketing, and ultimately a more profitable business in the long run.

If you wish to understand how you can implement these strategies for your cafe, restaurant, bar or any other F&B outlet, we would love to organise a complementary business consultation and demo session.

For any further information, have a chat with our experts to see if Advocado suits your business.
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