Tags: Incentives & Rebates
How to Measure Success of Rebate Programs
Rebate programs should drive sales, not frustration. Unfortunately, many organizations fail to maximize the potential of their rebate offers and lose sight of what makes them so valuable in the first place.
Companies offer rebates for three primary reasons:
- Gain market share
- Reduce competitor market share
- Increase sales
While customers love rebates, it’s more about offering a better deal to boost short-term sales and gathering customer data to boost long-term sales.
Rebate programs are powerful tools under the right strategy. Let’s look at what makes rebates so useful and discuss how companies can make the most of them.
Rebates vs. Discounts
A common misconception is that rebates and discounts are the same, which is not true. A discount is given at the time of purchase, whereas a rebate is given afterwards.
Discounts offer a lower price to anyone making the purchase, but a rebate has certain incentive requirements that must be met. The requirements are designed to increase the volume of purchases, the value of purchases, and the percentage of purchases. The incentives also create customer loyalty, because the customers will likely keep returning in order to meet a new incentive requirement. Discounts can affect price integrity, as well as negatively impact the reputation of the seller’s brand.
Just because a customer reaches the rebate incentive, does not mean they will follow through with the steps to claim the rebate reward. This results in a portion of the sales to be at full price allowing the seller to gain even more profit.
Creating a Successful Rebate Program
Before launching a successful rebate program, it is critical to set clear, measurable goals. Every company may have a different goal depending on the industry they are operating in and the trading partners involved. Below are four common goals companies set for their rebate programs, as well as the strategies put in place to achieve these goals. No company can measure success without establishing expectations.
Anyone who runs a rebate program needs to set specific, measurable goals before launching a rebate program. Below are four common goals companies set for their rebate programs and the optimal strategies to meet those goals.
1. Higher Sales and Market Share
The most straightforward goal is also the easiest to measure. If the company sells more during rebate periods (and if customers indicate the rebate influenced their purchasing decisions), then the rebate was successful. Research suggests that 75 percent of customers are more likely to make a purchase if a rebate is offered. And four in five customers are willing to fill out surveys during rebate redemption, so ask about that factor during the redemption process.
2. New Customers
Breaking into new markets isn’t cheap. With a rebate program, companies can entice new audiences with lower prices without sacrificing as much revenue as they would with a discount. One survey from Access Development found that 60 percent of Millennials are open to changing brands to get a benefit, such as a rebate. Offer a rebate to new audiences and compare that market growth to areas that did not receive the same offer.
3. Improved Understanding of Customer Behavior
Some companies don’t know exactly who their end customers are. Rebate programs allow companies to engage with end-users while collecting valuable consumer information during the rebate redemption process. The data captured provides insights into specific demographics that prefer certain products which can be used to improve products and services. Additionally, marketing departments will be able to bolster email lists and deliver more relevant offers for future campaigns.
4. Build Loyalty
Offering rebates can increase customer loyalty. According to Access Development, 62 percent of loyal consumers take advantage of rebates from their favorite stores. This is compared to non-loyal customers, of which only 44 percent take advantage of rebates. Rebates encourage loyal customers to come back for more. To measure the effectiveness of rebates in customer loyalty, utilize customer surveys to gauge how many recurring customers continue to redeem their rebates.
Rebate Management Solutions
Rebate programs are a great way to support a company’s strategic plan to reach new customers and increase sales. Implementing a rebate program can be a complex process, but with the correct tools and knowledge, it can be done successfully. Are you looking to streamline or implement a Rebate Program?