Rebates come after the sale — for the percentage of customers that follow through. Regardless of your product, service, market or industry, rebates can push more customers into engaging with your business. Top advantages include:. The best campaigns create high perceived value, keep profits high and result in positive customer experiences.
To help boost your marketing campaign:. At Incentive Insights, we help businesses sell more, gain more exposure and build better customer relationships with tailored programs. Deliver a rebate program in step with your company. We design customer portals with a range of customizable options, helping companies take full advantage of the range of benefits rebates offer. See what we can do for you by getting a free offer setup or calling today.
By Incentive Insights. In Rebate Marketing. The Benefits of Rebate Marketing Rebate marketing helps businesses increase conversion rates using rewards in place of discounts, motivating customers to buy while keeping market rate firm. The Advantages of Rebates Regardless of your product, service, market or industry, rebates can push more customers into engaging with your business. Top advantages include: Valuable sales incentives: The right rebate marketing strategy creates valuable customer incentives through purchasing rewards.
The best practice is to pay rebates, not on invoice price but the pocket price. Indirect Customer rebates, sometimes called end-user rebates, are rebates between a supplier and an indirect customer: that is, the seller never invoices this customer.
Indirect Customer rebates are an effective tool for maintaining a strategic supply relationship with an end-user, and driving mix and volume objectives, despite the absence of a billing relationship. In most cases, Indirect Customer rebates take the form of a check, as opposed to a credit memo, which would be the case when a billing relationship exists. Price Masking rebates, sometimes called shelter upcharges, are designed to allow invoicing at an artificially high price.
Price Masking rebates and shelter upcharges stem from a desire to avoid self-induced downward pricing pressure in competitive and transparent markets. In these situations, a supplier agrees to a price for a given customer but does not want to risk having that price become visible in the marketplace, believing, and rightfully so, that a price that low will cause market erosion.
If other customers learn of that price, they too will want it. In this case, rebates are an effective method of quoting a low net price while invoicing at a higher price.
The supplier recognizes that rumors of low net prices are one thing, but a low price on an invoice is the kind of evidence that can move markets.
Similarly, when a corporate office does not want its regional offices to have visibility into true cost, the corporate office will often ask the supplier to issue all invoices at one price and then rebate the difference. National distributors frequently request this type of price rebate from their suppliers, effectively masking net price from their regional branches.
Avoiding any action that will create downward pricing pressure is a very good reason to employ rebates. Whether you are using these types of rebates to reward incremental volume, avoid customer gamesmanship or mask your true price on an invoice, rebates are a strategic and tactical pricing tool. Every element in the price waterfall of a business should, therefore, be for a specific purpose. This is especially true of rebates. If your business uses rebates, it should employ a set of rules for when rebates are applied, how they are evaluated, and a detailed definition of the process for applying them.
The question for you then is: Are rebates helping you accomplish your stated pricing goals? Now that you are familiar with each type of rebate, the question becomes, where you use each type of rebate? Rebates should be designed to drive a specific type of customer behavior. What we find, across verticals, is that many companies have very complex rebate structures driving one, simple customer behavior: revenue.
Rebates have become more and more complex over time because they can, with Excel as the system of record. Yet customer behaviors have not evolved as an outcome of these increasingly complex rebates. In many settings, rebates become nothing but an additional driver of both price leakage and administrative complexity.
Suppliers should review their rebate strategy, and start by setting goals. For each channel, customer, or segment, what behavior are you trying to achieve? For each desired behavior, establish which type of rebate to employ. Suppliers can create a set of rebate templates: a rebate playbook to help cut down complexity while ensuring the right rebate is applied to the right customer objective.
After establishing a rebate playbook and picking the right approach for each objective, suppliers should review rebate templates to ensure that rebate complexity and rebate value are aligned. The chart below depicts the Complexity of the Rebate Structure, which ranges from low to high on the vertical axis.
The horizontal axis depicts the Value of Desired Customer Behaviour, which ranges from low to high. The diagonal band represents the area of best practice. I Accept Show Purposes. Your Money. Your Practice. Popular Courses. Key Takeaways Instructions to claim a rebate can be deliberately fussy, confusing, or difficult to fulfill.
Expiration dates are purposefully unrealistic. Some rebates just never arrive. Related Articles. Now What? Financial Fraud Don't Sign That! Legal Pitfalls of Signatures. Partner Links. A checking account is a highly liquid deposit account held at a financial institution that allows deposits and withdrawals. How Cover Letters Work A cover letter is submitted with a job application and resume explaining the applicant's credentials and interest in the open position.
How Does Cash Back Work? Cash back refers to a credit card that refunds a small percentage of money spent on purchases. You can also sign up through cash-back sites and apps. Buy Now, Pay Later is a type of point of sale installment loan. Learn how Buy Now, Pay Later works and the pros and cons of this financing option. What to Know About Recurring Billing A recurring billing or recurring payment is when a merchant automatically charges a customer for goods or services on a prearranged schedule.
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