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    • Blog /
    • How do Rebate Programs Work?

    Group O Blog

    How do Rebate Programs Work?

    December 12, 2022
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    Tags: Incentives & Rebates

    Rebate Programs

    Rebate Programs and how they workA rebate program is used to incentivize sales. In short, a buyer makes a purchase from a seller, and afterwards the buyer can claim a rebate from the seller. The rebate is a money-back reward for purchasing a certain value, volume, or percentage of goods. It is essentially a delayed discount. 

    Rebates are a more suitable option than discounts, because if a company continuously discounted their goods, it would result in a gradual loss of the company’s profits. Discounts can also negatively affect the company’s reputation. 

    Many different types of businesses count on a rebate program to increase sales, receive stable and predictable orders, and drive customer loyalty. Businesses like wholesale distributors, retailers, electronic suppliers, and so forth.

    When implementing a successful rebate program, there is a lot of strategic planning involved. Listed below are the critical steps taken when executing a rebate program.

    The Incentive Agreement 

    First, an incentive program must be decided and agreed upon. The incentive program is based on the type of industry of the company, their long-term goals, the targeted clientele, and so on. Once the rebate agreement has been implemented, it is marketed to new and existing customers. 

    Some popular rebate incentive agreements are fixed monetary rebates, fixed volume-based rebates, fixed value-based rebates, fixed percentage rebates, and growth-based rebates. 

    Even with these different kinds of commonly used rebate programs, they don’t all look the same for each company. For example, two companies both using a fixed volume-based rebate program, may not have the same incentives. Each program is customized for the specific company.

    Purchase

    Once the rebate incentive has been agreed upon, customers are now able to purchase goods and earn their rebate. Depending on what the incentive agreement entails, customers will have to purchase a certain value, volume, or percentage of goods before they are able to qualify for a rebate payment. 

    Rebate programs aren’t always straightforward. They can consist of a tiered growth-based rebate that depends on the target turnover and earning turnover.

    To move forward, the agreed upon incentive must be met. This process can be quick or take a long period of time, but there is typically a given timeline.

    Claim & Process

    Over a period of time and purchases, the incentive rebate goal has been met and the customer can now submit their claim. There is an elaborate 6-step process a claim has to go through to be processed and verified, which can take around two weeks. The reward is then sent out in the form of a prepaid card, gift card, check, etc.

    Rebate programs are complex and can even be frustrating at times, which is why it is important to have an efficient rebate processing system in place. With the proper knowledge and tools, it can be done successfully. 

    Rebates Reward Your Customer (and Your Business)

    Rebate programs can be a complex process, but the results are rewarding for both the seller and buyer. They are a great tool to increase sales, market new products, and build strong relationships with clientele.

    Interested in seeing how a rebate program could work for your business? Contact Group O today at 866-476-8761 to learn more.

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    Incentive Marketing Solutions

    • Incentives and Rebates

      • Rebate Management Services
      • Consumer Incentive Program Solutions
      • Channel Incentives
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      • Prepaid Reward Cards
      • Rewards
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    • Kitting and Assembly Services
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    • Supplier Management
    • Tail Spend Management
    • Volume Filling

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    • Packaging Materials
    • Food Industry Packaging
    • Cannabis Industry Packaging
    • Packaging Equipment
    • Parts and Service
    • Packaging Optimization
    • Stretch Film

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    • Custom Packaging Assessment
    • Packaging Design & Structure
    • Custom Rigid Boxes
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    • Mobile Device Kitting & Fulfillment
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    • Mobile Device Returns & Dispositioning
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