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: to gain market share, to reduce competitor market share, and to 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
Discounts and rebates are the same, right? Not exactly.
Discounts offer a lower price to everyone who purchases the product. When offering a rebate, there is the perceived value of a discount. However, rebates require a little extra work on the part of the customer. Not every buyer follows through with the steps to claim, allowing a portion of the sales to be at full price.
Smart organizations measure the success of their rebate programs against preset benchmarks. If the company sold more units during the rebate period than usual, the rebate might have impacted that upswing. Sellers should solicit customer feedback to discover whether the rebate influenced purchasing decisions or whether the boost happened for unrelated reasons.
Increased sales aren’t the only way to measure a rebate program’s success, though. Every company wants something slightly different. One organization might prioritize volume over profit to establish a new product, while another might aspire to win a higher percentage of sales over a competitor. The definition of success depends on the needs of the company running the program.
Creating a Successful Rebate Program
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 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.
Rebate programs are two-way communication opportunities for brands to achieve a variety of goals. Whether a company wants to sell more units or learn more about its customers, rebates have the power and versatility to handle the job.
Are you looking to streamline or implement a Rebate Program? Learn more about your options on our Rebate Management Solutions page or contact us!