A 10% discount — you simply earn 10% less. Right now. The customer is happy, but there's zero motivation to come back — they'll get the same discount at a competitor.
5% cashback works differently: the customer spends those bonuses on the next visit. So you only pay when they return. Plus the "shame to waste it" effect — €4 sitting in their account pulls them to you, not to the competition.
A progressive scale — that's where the magic is. 3% for new customers, 5% after €250 spent, 7% after €750. The customer sees progress, visits more often. Not theory — we see this in our analytics every day.