Points and cashback both thank customers for buying from you. They feel different to customers, though, and they encourage different behavior.
There is no universally better choice. The right one depends on how often your customers buy, how much they spend, and what you want them to do next.
How points work
Customers earn points on their purchases and redeem them for rewards you define, such as a free item or an amount off a future purchase. Points create a goal: customers can see how close they are to the next reward.
Because the reward comes later, points give customers a reason to come back to you rather than going elsewhere.
How cashback works
Customers get back a share of what they spend, usually as credit for a future purchase. The value is easy to understand: spend $100, get $5 back.
Cashback feels immediate and fair. There is no conversion to explain and no catalogue of rewards to manage.
When points fit best
- Customers buy often, such as cafés, restaurants and everyday retail.
- You want to build a habit of coming back.
- You have rewards that feel special, like a free product or an experience.
- You want flexibility to run bonus point campaigns for specific customers.
When cashback fits best
- Purchases are less frequent or higher in value.
- Your customers value simplicity and clear value.
- You do not want to manage a list of rewards.
- Your staff need something they can explain in one sentence.
Questions to help you decide
- How often does a typical customer buy from you?
- What reward value can your margins support over time?
- Will your customers understand the program without help?
- What behavior do you want to encourage: more visits, larger purchases, or a return after a long gap?
Work out the real value
Whichever you choose, calculate what the reward is worth as a share of spend. For example, if customers earn 1 point per dollar and 100 points unlock a $5 reward, you are giving back 5% of spend, which is the same value as 5% cashback.
The same value can feel very different. 5% cashback is visible on every purchase; 100 points toward a reward builds anticipation. Choose the experience that suits your customers, then set the rate your margins can sustain.
Start simple, then adjust
Launch with one clear earning rule and one or two rewards. Watch how customers earn and redeem over the first months. If rewards are rarely redeemed, the goal may be too far away. If almost everyone redeems immediately, the program may be costing more than it needs to.
With OTONUM
OTONUM supports both points and cashback, with earning and reward rules you define. Customers join by scanning a QR code, and you can track what each customer earns and redeems.