How to Implement a Rebate Marketing Program to Acquire New Customers and Boost Your Sales

Marketers all over the World in many different industries implement rebate marketing programs to boost sales and attract new customers. This article will explain what a rebate marketing program is, how to implement one, some important considerations, and the pros and cons of a rebate marketing program.

What is a Rebate Marketing Program?

Rebates, or sometimes called “refunds” are a popular tool used by businesses to promote their products and services. Rebates are different from “coupons” in that they are not a discount from the purchase price, at point of purchase, but rather a refund or gift sent later to the customer after the purchase. Rebate programs typically include some form of data gathering about the purchaser at the time of rebate registration.

How to implement a Rebate Marketing Program

Step 1: Offer a rebate to all who purchase a product or service.

Typically, a business offers the rebate marketing program as a limited time promotion. This has to be communicated through advertising to a business’s target market. The success of a rebate program is highly dependent upon potential customers’ awareness of the rebate offer. You can send out rebate offers as a direct mail campaign, or simply have the rebate forms displayed at the point of purchase.

Step 2: Create rebate fulfillment rules.

Typically, a customer will be asked to mail or register on-line and provide details about the purchase, like a proof of purchase and the UPC (Universal Product Code).

Step 3: Collect the Data and Rebate Fulfillment.

A business needs to have a plan to fulfill the rebate. This can be a time consuming and labour intensive process of collecting the marketing data about the purchaser, checking the validity of the rebate submission, and mailing out the rebate check or promotional item promised in the rebate. Typically, this part of the program is outsourced to a Rebate Clearinghouse, or a Rebate Fulfillment Company, or sometimes called a Rebate Management Company. These companies usually provide a mailing address to send in the required documents, or an on-line solution to collect and verify the rebate. Many also provide a service to print and direct mail the cheques out to the rebate applicants.

Step 4: Analyze the results.

Your Rebate Management company should be able to provide you with lots of data about the amount of rebates fulfilled, the names, addresses and phone numbers of the rebate applicants, date of purchases, and the total cost of the program. You can then correlate this to your sales figures for the period and determine the effect of the rebate promotion.

Important Considerations

· The rebate needs to be compelling in order to be effective. A $1.00 rebate will not generate much response. In comparison, a $50 rebate will be worth the effort to mail in, or register for the rebate. This is why typically; rebates are for high value items.

· Not everyone takes advantage of a rebate program. Typically only 25-40% of purchasers who are eligible for a rebate will actually go through the steps to obtain it. You need to factor this into your ROI that a large percentage of the people who buy the product or service because of the rebate, will never take advantage of it. This makes rebate programs very effective and low cost.

· Select a rebate clearinghouse that can handle your promotion. Ensure the rebate management company has the staff, expertise and experience to receive and process your rebates. If the rebate fulfillment part of your promotion isn’t done painlessly for the consumer, you end up with dissatisfied customers.

Consider 3 factors in your overall design:

Increasing the size of the rebate will increase sales AND redemption rates
Increasing the effort required to obtain a rebate will decrease sales AND redemption rates
Giving consumers more time to redeem the rebate increases redemption rates.

Pros and Cons of Rebates

Pros

Cons

· Simple to communicate and understand, depending on the offer structure

· Although discount based, it avoids the “discount on every purchase” mentality

· Rebates in the form of gift certificates can often drive customers back to the store

· Does not require much administration

· Cheaper to administer than a reward points based scheme

· Can allow tiered offers for highest value customers ice: buy 1 get $10, buy 10 get $100

· Does not provide instant gratification

· Rewards profitable and unprofitable customers alike

· Can be expensive depending on the rebate thresholds

· Disguised discount program affects margins

· Can alienate infrequent shoppers

· Easily emulated by competition

At Dare Marketing, we have the experience, the staff and the technology to manage your rebate fulfillment program seamlessly. If you have any questions about how to set up a rebate fulfillment program please give us a contact us, our marketing experts are standing by to answer your questions.