Five ways to encourage shoppers to spend their tax refund with you

Tax season is here and for many of your customers, that means a tax refund. Some shoppers will spend that extra cash on essential big-ticket purchases or the occasional splurge. Is your business ready to make the most of tax season and those refunds?

For the 2023 tax season (2022 tax year), the average federal tax refund was $3,167, and 65% of U.S. tax returns resulted in a refund.

And for those expecting a refund, that cash can’t hit bank accounts soon enough. Among those filing a federal tax return in 2023, 36% relied on their refund.

According to a 2023 study, those with poor credit scores are most likely to rely on their refunds to make ends meet or get what they need, compared to those with higher scores. Among those with credit scores between 300 and 579, 59% said they rely on their tax refund.

And while half of consumers expecting a refund said they'd add the extra cash to their savings, 10% planned to use it for a major purchase and another 10% planned to use their refund to splurge.

Tax return time can mean an infusion of cash for many consumers' budgets and a big opportunity to increase your sales. Here are five strategies to encourage shoppers to spend their tax refund at your store.

1. Start your customer outreach now

If there are no issues with their return, most taxpayers receive their refund in 21 days when they file electronically and choose direct deposit. Those who expect a refund tend to file their taxes sooner than later. And while they wait, they're likely already thinking about how they'll spend it.

That's why now is the time to remind customers that your store is an excellent place to spend their tax refund. If you wait until shoppers have their refund in hand, they may have already decided how to spend it. Reach out through email, social media, and other marketing channels to let customers know you're ready for tax season and looking forward to seeing them once those refunds start coming in.

2. Leverage marketing and social media

Attract tax-refund shoppers to your store through marketing and social media campaigns.

Social media platforms such as Facebook, Instagram, and Twitter are excellent channels to reach a wide audience. Create posts highlighting your products or services – and promote the option of using a tax refund to pay for all or part of a big-ticket purchase. You can also post a question to your Facebook or Instagram account, asking followers how they plan to use their refunds to get them thinking about spending their refund with you.

Consider targeted ads, direct mail, email, and other marketing efforts to promote your store and what you offer to potential customers.

3. Offer special pricing

Special pricing can be a powerful incentive for shoppers to spend their tax refund at your store. Consider offering discounts, sales, or promotional deals on popular items. You could also provide a "tax refund bonus," such as an extra percentage off when customers shop on the April 15 tax filing deadline. Or, consider offering a special incentive tied to tax season.

Remember to make your special pricing visible and easy to understand. Highlight any offers on your social media platforms, website, customer emails, and in-store signage to ensure customers are aware of the potential savings.

4. Encourage a tax refund as part of a big purchase

A tax refund can help customers make a big purchase they've been considering. But depending on the amount of their refund, it may not cover a big-ticket purchase such as a major appliance, a set of tires, or new furniture. Promote using a tax refund as part of a bigger purchase through your marketing channels, including in-store signage.

Customers may need to use financing in addition to their tax refund to make a large purchase more feasible. Make sure shoppers know the financing options you offer, including options for customers with less-than-perfect credit.

5. Enhance the shopping experience

Improving the overall shopping experience can also encourage tax-refund shoppers to visit your store. Consider offering extended shopping hours for those looking to make the most of their refund. This not only makes shoppers feel valued but also provides a more relaxed and personalized shopping environment.

Ensure your staff is well-informed, ready to offer exceptional customer service, and knowledgeable about the specifics of your tax refund promotions and how to help customers maximize their refunds in your store. Exceptional service can make a significant difference in where consumers choose to spend their refund.

Lastly, don't underestimate the power of a positive in-store atmosphere. Make sure your store is inviting, well-organized, and ready to welcome shoppers looking to spend their tax refund. Music, lighting, and even scent can impact a shopper's mood and willingness to make a purchase.

Maximize the potential of tax season for your business

The tax season can be a lucrative time for retailers. With a few simple strategies, you can encourage shoppers to spend their tax refunds at your store. Communicate the value and benefits your products or services offer, making it an easy decision for customers to spend their hard-earned refund with you.

About Snap Finance

Snap Finance harnesses the power of data to empower consumers of all credit types to get what they need. Launched in 2012, Snap’s technology brings together more than a decade of data, machine learning, and nontraditional risk variables to create a proprietary decisioning platform that looks at each customer through a more holistic, human lens. Snap’s flexible lease-to-own and loan solutions are changing the face and pace of consumer retail finance.

For more information, visit snapfinance.com.

Snap-branded product offering includes retail installment contracts and lease-to-own financing. Talk with your local Snap sales representative for more details on which product qualifies at your store location. For more detailed information, please visit snapfinance.com/legal/financing-options.