It’s fair to say that just about everybody, both companies and individuals, likes to save money. That’s why retailers and other commercial interests offer consumer rebates. They want to capitalize on the good feeling that goes with saving money to encourage new customers and maintain the loyalty of current customers.
Consumer rebate programs seem simple enough in principle. Someone buys a product or service at full price and then receives a rebate that, in effect, lowers the cost of the product or service. Wish it were that easy. These days, rebate programs, like other incentive strategies, have to take into account a lot more variables than they did just a few years ago. The technology and ways people want to interact with it have expanded significantly—think smart phones and eCommerce. How to get the most from a rebate program has gotten a lot more complicated.
Given all this, why would you use a rebate program for your business? The answer is simple: Rebates work. You just have to recognize the opportunities and avoid the pitfalls.
Consumer Rebate Program Opportunities
What do you want for your business? Better sales? New markets? A bigger share of the market? To get a new product out into the marketplace? Get rid of slow-moving inventory? Avoid the downside of discounts?
Handled well, a consumer rebate program can help you reach your objectives. In addition, you can collect data that will help you understand your customers better and develop even more effective incentive programs in the future.
To look a little closer at why consumer rebates works:
- Building your sales. People are more likely to buy if they see that they’re getting a financial reward for doing so. About a quarter of consumers say they’re more likely to purchase if they like the rebate.
- Breaking into new markets. Do you want to gain customers among the 55+ demographic? The right rebate could pull them away from another brand and into your orbit.
- Increasing market share. Brand loyalty is on the wane. The opportunity for luring consumers away from competitors is growing. But it takes the right bait, and a strong rebate program can do the trick.
- Introducing a new product. Word of mouth is a great way to increase sales—and consumer rebates can get the conversation going and build momentum for new product launches.
- Moving inventory. Inventory that sits still starts to lose its value. You want to keep it moving. Rebates give customers a reason to buy and, in the end, you don’t lose money. You save it.
- Collecting consumer data. The ability to collect information about consumers has never been as powerful as it is now. The data can offer insights that help focus consumer rebate programs and make them as effective as possible.
- Avoiding discounts. The problem with discounts is that they reduce retail price paid, therefore lowering the perceived value of what is being sold.
There are no hard and fast rules for developing a successful consumer rebate program, but there is some hard-earned wisdom that deserves respect.
Successful Consumer Rebate Program Guidelines
Doing consumer rebates right boils down to paying attention to three basic principles:
- Make it fast and easy
- Cover the access bases
- Make it worth your customers’ time and effort
Make Consumer Rebates Fast and Easy
For strong consumer rebate programs, speed and ease apply at both ends: asking and receiving. The process of applying for the rebate should be fast and simple and so should getting it. Instant rebates take this suggestion to the extreme, and can be rather costly, giving everyone a smaller instant incentive. The ideal time frame is just under a month, however, a more realistic time frame is around 60 days.
The key is to avoid stretching out the process too long by making it difficult to apply (too much documentation, for example) or delaying the payoff. On the other hand, you have to give consumers adequate time to apply for the rebate. Frustrated customers are not as likely to become loyal customers, especially if they think you’re making things hard just to avoid having to pay.
As a consumer yourself, you’ve probably responded to rebate offers. What was the experience like? Did you have to fill out a lot of paperwork? Did the rebate take months to get to you? Did you give up in disgust and forgo the rebate? Use that personal experience to help design your program. What would make you happy will probably make your customers happy.
Cover the Consumer Rebate Access Bases
Right now, it looks like more than three quarters of consumers would rather use digital means to get their rebate. That’s impressive, but it doesn’t mean you should put all your eggs in that particular basket.
Considering your product, the demographics of your customers and other factors, would direct mail work better? Or would it be best to use every option? Yes, the world is moving closer and closer to all-digital transactions. But there are still many consumers who would rather use paper.
Get the Most Out of Your Consumer Rebate
Henry David Thoreau said it all: “Simplicity, Simplicity. Simplicity.” Even the most generous of consumer rebates can lose its luster if it’s too hard to get. The secret is to think about your customers’ needs as well as your own. When setting your minimum requirements, you should consider what needs to happen to make a customer purchase the product and keep it.
Again, look at your own experience with rebates on purchases. What made the time and effort worthwhile? Did you get a choice? Could you choose from a reward card or a check? How was it delivered? By mail? By email? With a deposit into your mobile wallet?
But most important, was it worth it? A $5 rebate on a $100 purchase doesn’t seem like much to most people. When you move to $10, you’ll probably see a better response.
Maybe it would be better to offer $5 on a $25 purchase and $10 on a $30 buy. In other words, make the rebate larger as the customer buys more. This approach encourages greater participation while increasing the perceived value.
In short, here are the factors that need to be considered as you develop your consumer rebate program:
- Bigger rebates lead to higher sales and more redemptions.
- Sales and redemptions drop as the difficulty of obtaining rebates increases.
- When customers have more time to apply for the rebate, more customers redeem.
Need more consumer rebate information?
Incentive Insights is in the business of helping companies develop programs that increase sales and market share, move inventory and introduce new products. If you need assistance putting a rebate program in place, Incentive Insights is ready to help.