If you're thinking the customer, think again.
After writing my last blog post, I decided to do some further "behind the scenes" research on mail-in rebates. In addition to discovering a multitude of complaints and horror stories from pissed off customers regarding the hassles of the rebate redemption process, I also gained a better understanding of who benefits most from mail-in rebate programs.
As I see it, here's the benefits to each of the parties involved:
Product Manufacturers
- Can show increased sales/profits due to the time lag between when products sold and when rebate expense payments are made
- Can use information collected from rebate forms for marketing research and for future direct marketing campaigns to stimulate additional sales
- During the "turn around" time, can earn interest on rebate payment(s) due to the customer
Retailers
- Can display a lower price for select items (i.e. price after rebate) but still charge the full amount at purchase
- Can reduce the price on certain items without having to change the price in the inventory/POS systems or on in-store signage
- Could make rebates conditional upon other criteria (i.e. other than the standard submission of UPC code, receipt, and other info. within the required time frame). For example, a computer retailer could require that a customer sign a long term contract with a particular ISP in order to get the rebate. The ISP could in turn give the retailer a "kick back" for every customer signed up.
Rebate Processing and Fulfillment Companies
- Make money from each rebate processed for a manufacturer or retailer. Some rebate fulfillment companies may even be rewarded by the number of rebate claims that they actually deny!
Customers
"All of this hoop-jumping fuss—the paperwork, the postmarking, the sales slips—is quite unnecessary, says Leonard. Fulfillment centers can now do it all online—whether or not the purchase was online, with a credit card, or with cash. They don't need the UPCs or the old phones or any such nonsense. The sales receipt could contain a unique code number that the consumer could enter into a Web site. Think of that the next time you are dissecting a box to get a lousy UPC code."
Obviously, customers appear to benefit the least from mail-in rebates. That said, if you're a "customer focused" company touting a great "customer experience," you may want to think twice about rolling out mail-in rebates. If you're dead set on rolling out mail-in rebates or if you already have mail-in rebate programs running, at least make sure you have an efficient and timely process to manage the rebate redemption process. Otherwise, in the long run, you may be doing more damage than good to your companies' reputation.
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