Paytm’s latest punch: Vijay Shekhar Sharma explains why cashbacks make sense

Even as we continue to see immense competition among mobile wallets with each vying for greater market share, Paytm’s Vijay Shekhar Sharma says that cashbacks work to retain customers. According to Vijay Shekhar Sharma, offering cashbacks makes the “customer pull out phone and try the product once.” Notably, Vijay Shekhar Sharma’s response came after UTV Group founder Ronnie Screwvala tweeted that he received a Rs 75 cashback after spending Rs 210 for a ice-cream. “At the airport and paying a single scoop of ice cream for Rs 210. BUT if I pay with PayTM I get Rs 75/- Back !!!! Mad mad when will this funding revenues with cash back and discounts and paying out of Equity money end,” asked Screwvala tagging Paytm in the post.

Vijay Shekhar Sharma responded saying that Rs 75 cashback was not bad CAC (Customer Acquisition Cost) for a customer like Ronnie Screwvala. “Thanks Vijay. But I will be a customer only till I get free money back and not thereafter – ever – so how will you ever make money OFF me – the reason your willing to feel I am a good future customer …this is the part I don’t get … and I am not old world so just wondering,” tweeted Ronnie Screwvala.

In response to this, Vijay Shekhar Sharma agreed that not everyone who came to party will be a long term friend.

“That said, a question for you as a communication person: what should be on counter message/ offering that makes customer pull out phone and try the product once. Cashback does work, what else is possible?” asked Paytm’s boss.

The exchange continued with Ronnie Screwvala saying that he can’t offer advise as Paytm has done great by attracting Scale capital and also built a team mandated to grow the market and build revenues. “My submission/learning is-in India once given free (or cash back) its impossible to convert + what works for alibaba in China will not work in India,” he noted.

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