Recognizing the Value of Rebates

Any successful marketing strategy will include a robust toolkit, including promotions. Within that realm, successful brands have multiple avenues to consider, depending on their objectives.

If you are playing the long game, you should take a close look at rebates.

It’s no secret consumers love a deal, but it’s not enough to drop prices or offer coupons when building a strategy to gain market share over the long term. If you want to get to know your customers, you are going to need some data. You might also need to incentivize your retail partners to educate shoppers on behalf of your brand. Rebates can do both.

 What’s Your Strategy?

Discounts, including coupons, are often one and done. The consumer redeems the coupon and you’ve made a sale, but you haven’t gained much data on that customer, which is critical for brand growth. Rebates generally require customers to share some data on themselves which brands can use for future marketing. That might include location of purchase, age (think the adult beverage market), UPC, possibly some contact information and more depending on how you set up the rebate redemption process.

Rebates can also be a good strategy for introducing new products or testing product pricing in certain markets. Rebates are particularly useful for CPGs where a rebate can help a commoditized product stand out.

Additionally, a rebate program might earn you premium placement with your retail partner, such as an end cap, or an eye-catching case wrap. Rebates can also encourage shoppers to purchase more than they normally would in order to get the rebate. If you wear contact lenses, you likely have been presented with an offer to purchase a full-year supply rather than a six-month supply in order to receive a substantial rebate.

On the partner side, a well-structured B2B rebate program can incentivize retailers to push sales of your product in exchange for rewards. A B2B strategy will deliver not just sales, but data to help you better understand how your retail partners are performing for you, and where your products perform best. This can work particularly well for sporting goods, automotive products, pharmaceuticals, animal health products and more. Working with your promotions partner, you can determine if this could be a good strategy for your brand.

Compliance

Let’s face it, compliance may not be the first thing you think about when it comes to designing a rebate program, but brands must ensure their promotions programs are fully compliant with federal and state laws. Various states have their own requirements, making compliance challenging for brands that aren’t staffed with in-house experts, or who are not working with a partner that is well-versed in compliance. Highly-regulated industries must be especially watchful. There are 17 control states where the state government manages the distribution and sale of alcoholic beverages, which can greatly restrict promotions efforts. Conversely, so-called open states make greater allowances for rebates, providing they comply with state requirements, including age verification.

Many states require rebate offers to be submitted for approval prior to print and distribution. Because the process varies by state, your marketing team or your promotional partner needs to understand the submission process for every state in your rebate program as this will impact your timeline to stand up the program.

Mapping it Out

Once you’ve established your goals and you understand the rules of the road, your rebate strategy needs to be aligned with your budget. The biggest factors include the cost to administer the program, as well as the expected rebate redemption rate. Again, this is where a promotions partner knowledgeable in anticipated redemption rates is helpful. If your program produces redemption rates that are too low, you might save in budget, but you won’t gain enough data to help with your long term goal of building loyalty and expanding your customer base. In other words, you will get very little return on investment.

It's well-known in the industry not every customer will redeem their rebate. You can ensure better redemption rates by understanding your audience, and knowing which tools best match their preferences.

Optimizing Your Customer Experience

Offering a rebate is one decision. Designing how your customers will experience it is also important in terms of what type of data you can gather and what kind of impression you will leave with customers. A seamless, hassle-free experience is the goal, but getting there leaves you with quite a few options.

It might seem like a no-brainer to rely on technology alone for an optimal redemption process. In many cases, that is the correct path. However, if your rebate involves B2B incentive program, or is particularly high-value, mail-in rebates might be the way to go, as they allow for a more robust vetting process to ensure the rebate was actually earned.

Technology can present its own stumbling blocks. Not everyone has access to a computer or a mobile device, or they might be distrustful of QR codes and new technology. Knowing who your customer is goes a long way toward designing a rebate strategy that will give you enough redemptions to make your program successful.

Business verticals that tend to do well with mail-in rebates include adult beverages, CPG, pharmacy (both human and animal), sporting goods, automotive and more.

By contrast, CPGs and lower dollar value rebates lend themselves well to digital redemption options. A customer might not want the complexity of putting something in the mail, or waiting to receive a reward in the mail for a low-value rebate – whereas the ability to upload a receipt to earn a gift card or a couple of bucks delivered to you via digital payment methods can give your shoppers a seamless experience, and give you a sale.

Digital brings some additional considerations, chief among them, how their digital rebate program will be platformed. Will you need a simple website for a one-time offer, or should you consider a digital hub for ongoing offers and enhanced customer engagement? Brands also should understand how consumer data will be managed to avoid running afoul of consumer data protection laws.

Regardless of whether you chose digital or mail-in you want to balance the amount of friction the shopper experiences, with the brand’s need for verification and data that gives overall value to the brand, deepening both an understanding of their customer, and ability to engage that customer over the long term.

Communication Throughout

Lastly, communications surrounding rebates need to be clear to consumers and partners. That includes how the rebate works and how consumers can track their rebate if it is not instantaneous. This becomes more important if a mail-in rebate is involved, or if it’s a B2B incentive program that involves a point system to earn rewards. Do you have a team to handle consumer questions, or a website that can help shoppers track their rebates? If you are running a B2B program, who will build that infrastructure? Who will supply verification and send out rewards? This is where a third party expert in promotions can take the heavy-lifting off your team’s plate to ensure your program aligns with your brand goals, gives you the data you need, is fully compliant and provides a positive experience for your customers.

Regardless of what type of promotion program you choose, you first need to determine your goals, and then align your strategy to meet those goals. There will be times when one plan of attack will yield better results than another. However, if you are looking to better understand your customers, introduce a new product, or build brand loyalty, rebates should be on your radar as a long term strategy for brand success.