In Consumer Rebate Programs

What’s the best way to appeal to buyers and earn loyalty to your brand? Is it by marking down your products, offering shopping cart codes and deep discounts? Or is it initiating a consumer rebate program, where customers who buy your product can earn some money back?

While there is no one right answer, and both options have their place, it’s important to understand some of the very real problems that deep discounts can present—and, some of the ways in which a rebate program can prove more beneficial. Here are some points to consider before you make a decision for how best to promote your brand to consumers.

Discounts Can Lead to Lost Confidence

While discounts can be effective in a retail setting, an overreliance on discounts can be problematic, specifically because it drains consumer confidence in your product.

That’s because, when you lean heavily on discounts, it suggests that the product isn’t good enough to sell without that discount—or, perhaps, that you’ve overpriced it from the start. Either way, you’ve played your cards already, and the result can be a consumer base that loses its trust in whatever it is you’re selling.

Discounts Can Create Bad Precedents

Another problem with discounts and shopping cart codes is that, once you provide one, you’re almost forced to offer it again. Consumers will come to expect a discount from you—and if the item they want doesn’t have a shopping cart code available for it right now, customers might wait until it’s on sale again.

Or else, they may just feel resentful about being asked to pay full price for something. When that happens, you can expect your customers to start looking at your competition, comparing prices and seeking the best deal.

Discounts Lower Value Perceptions

Value tends to be closely associated with price; when something is priced higher, people assume it’s worth it. But when you offer steep discounts, it creates the impression that maybe your product isn’t that valuable after all. Your sales reps can, in turn, have a harder time moving inventory.

There’s a reason why Jaguars are never marked down, and why other luxury brands typically aren’t known for their big discounts and sales. It’s because they have created a strong sense of value—the impression that their products are worth more. Shopping cart codes can destroy that impression.

With Discounts, Price Becomes the Sole Focus

Another important point to make about discounts and shopping cart codes is that, when you introduce them into any sales situation, they immediately make price the sole focus. If affordability is your product’s greatest feature, that can actually be a good thing—but if you’re hoping to focus on your product’s utility, reliability, or aesthetics, then a discount can actually undermine those efforts.

You just have to ask yourself what you want the focus to be—on your price, or on something else? Companies that rely on discounts will quickly find that price is the big thing they are known for.

Discounts Cut into Profits

The final point about shopping cart codes is perhaps the most obvious one, but still one worth voicing: When you discount a product, you eat into your profit margins and may have a harder time hitting those revenue goals. Of course, some companies price their items with future discounts in mind, but even so, it’s important to remember: Discounting yourself out of business is a very real possibility.

Those are some of the major drawbacks that come with shopping cart codes—but what about customer rebate programs?

The Value in Customer Rebate Programs

Often, customer rebate programs are perceived to be somewhat old-fashioned. That’s because many people associate them with the old mail-in model. Today, though, digital rebates provide a more seamless experience, and allow the end user to receive rapid results—making rebate programs incredibly valuable.

In fact, customer rebate programs can provide some perks that discount codes can’t. One is that they actually allow you to collect some meaningful consumer data; if you require consumers to input some basic information before they can redeem their rebate, that’s data you can use to better hone and target your future marketing efforts.

Another noteworthy aspect of digital rebates is that they do not require the user to submit as much physical proof of purchase—which means that the opt-in rate for digital rebates is somewhere close to 100 percent.

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