Points vs Cashback vs Vouchers: Which Reward Works Best?

Key Takeaways

• Points can encourage customers to keep returning and collecting rewards.
• Cashback gives customers a direct and easy-to-understand benefit.
• Vouchers can encourage specific purchases or increase basket value.
• The right reward depends on the business model, customer behaviour and campaign goals.
• A combination of reward types can help businesses create a more flexible loyalty programme.

Customer rewards can play an important role in encouraging repeat purchases.

Whether it is a retail store, restaurant, online business or service provider, offering customers something in return for their purchases can help strengthen long-term engagement. In Malaysia, businesses can use different reward formats as part of a customer loyalty programme to encourage customers to come back. 

But which option works best?

 

How Do Points-Based Rewards Work?

Points-based rewards allow customers to earn points based on their purchases or other activities. These points can then be exchanged for rewards, discounts or other benefits.

For example, a business could offer 1 point for every RM1 spent, with customers able to redeem 100 points for a RM5 discount.

Points can be useful for businesses that want to encourage customers to keep participating in a loyalty programme. The gamified points and system can give customers a reason to make another purchase so they can reach their next reward.

This approach can work particularly well for businesses with frequent repeat purchases, such as F&B businesses and retail businesses. 

 

Why Do Businesses Use Cashback Rewards?

Cashback gives customers a portion of their spending back as a monetary reward.

For example, a business might offer 5% cashback on eligible purchases. A customer spending RM100 could receive RM5 in cashback to use on a future purchase.

One advantage of cashback is that the benefit is easy for customers to understand. They do not need to calculate how many points they have earned or learn a complicated redemption system.

Cashback can also encourage customers to return because their accumulated cashback gives them an incentive to make another purchase.

 

When Are Vouchers More Effective?

Vouchers provide customers with a specific discount or benefit that can be redeemed under certain conditions.

A business could offer a RM10 voucher for purchases above RM50, a discount voucher for a customer's next visit or a voucher for a specific product category.

Unlike points or cashback, vouchers can be designed around a particular business objective. For example, a retailer could offer a voucher for a new product category, while a restaurant could provide a discount voucher to encourage customers to visit again during quieter periods.

This makes vouchers useful for targeted promotions and campaigns.

 

Which Reward Is Easier for Customers to Understand?

The simplicity of a reward can affect how likely customers are to use it.

Cashback is generally straightforward because customers can see the monetary value they receive. Vouchers can also be simple when the discount and redemption conditions are clearly explained.

Points can require slightly more effort because customers need to understand how points are earned, how much they are worth and what they can redeem.

However, a well-designed points programme can make earning and redemption feel more engaging, particularly when customers can see their progress towards a reward.

 

Which Reward Is Better for Customer Loyalty?

The best reward depends on what the business wants customers to do.

Points can be effective for building an ongoing loyalty programme because customers have a reason to continue accumulating rewards.

Cashback can be an effective incentive during specific campaign periods to encourage customers to make purchases and boost sales. 

Vouchers can be useful when a business wants to influence a specific purchase, product category or time period.

Rather than choosing a reward simply because it is popular, businesses should consider their customer purchasing patterns and the behaviour they want to encourage.

 

Can Businesses Combine Points, Cashback and Vouchers?

Businesses do not necessarily need to choose only one reward type.

A loyalty programme could use points as its main reward system while offering vouchers for special campaigns or cashback as an additional incentive.

For example, a retail business could allow customers to earn points from purchases, provide a RM10 birthday voucher and offer additional cashback during selected promotional periods.

Using different reward types can give businesses more flexibility while allowing customers to receive benefits that suit different purchasing situations.

 

What Should Businesses Consider When Choosing a Reward?

There is no single reward format that works for every business. Before introducing a loyalty programme, businesses should consider:

• How frequently customers make purchases
• Average transaction value
• The type of customer behaviour they want to encourage
• How simple the reward should be to understand
• Whether rewards should encourage repeat purchases or specific products
• How easily rewards can be tracked and redeemed

The reward should also make sense financially. A loyalty programme needs to provide customers with meaningful value while remaining sustainable for the business.

 

Choosing the Right Reward for Your Customers

Points, cashback and vouchers can all support customer retention, but they work in different ways.

Points can encourage continued engagement, cashback provides a direct financial incentive, while vouchers give businesses more control over specific promotions.

For Malaysian businesses, the right approach depends on the customer journey, purchasing frequency and goals of the loyalty programme. When combined with suitable in-store payment and online payment solutions, rewards can become part of a smoother experience from checkout through to repeat purchase.

Revenue Monster provides online payment gateway solutions that can support businesses as they manage digital payments and customer transactions across different sales channels.