Platform Profile: Social Rebate turns customers into brand advocates through cash rewards

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Here's a new twist on the rebate concept, instead of just rewarding your customer with a cash payback, why not make them advocate the brand in order to get it?

Social Rebate is a marketing tool that allows brands to reward its customers with cash rebates for promoting them on social media networks. Share Magnet, the software company behind Social Rebate is banking on the fact that a friend's referral of a brand's product is far more effective than seeing the brand's advertising on social media.

“Even though all of our personal relationships are connected through social media, the advertisements we get on those networks are very impersonal,” says Share Magnet CEO and co-founder Tom Larkin. “People would rather buy from a friend than a brand, because you implicitly trust your friends and their judgment.”

How It Works:

The basic mechanism of Social Rebate is fairly simple. Every time a customer shares a post about their recent purchase or promotes the brand on a social network, they get a small amount of cash back from their purchase. It functions just like a regular rebate, but instead of having to fill out and mail some form to get the cash back, the customer just has to promote the brand on a platform like Facebook.

For example, a customer buys a $100 shirt online from J.Crew.  On the checkout page, after the purchase is completed, a rebate screen will pop up, telling customers they can get up to $10 in cash back (10% of the total purchase price) by sharing a customized message about J.Crew on Facebook.

The message could range from a call to action such as “Join our Facebook Page!” or just a link back to J.Crew's website with a discount offer, and the customer has the option to add their own message to the post.

When that customer decides to post that message on their Facebook profile, they will immediately get 25% (in this case $2) of the rebate back through a PayPal transaction which deposits the money directly into their account. Once the brand's message is posted, the customer will get an additional amount of cash back for every follower who clicks on the message. How much a customer receives for every click can be set by the brand, and an upper limit for how much will be paid out in total (in this case $10) can also be set. In addition, Social Rebate creates a sense of urgency about sharing by only giving the customer a five-day window in which they have to post the message.

To recap, let's say a customer buys a $100 t-shirt, with a rebate of up to 10% back and $1 payout for every click they generate. Here's the maximum a customer could potentially make back:

Initial share = 25% of total rebate = $2

Post generated 8 clicks = 8 X $1 = $5

Total Payout = $2 + 8$ = 10$

In this way, a customer has a real cash incentive to talk about a brand on social media, without a whole lot of effort. Social Rebate says this kind of reward works better than just giving a customer a discount on their next purchase, since they just bought something from that brand and are unlikely to buy again in the near future. It's more efficient for them to generate their own reward by advocating the brand through a few clicks. Not only does this create automatic social brand advocates, it generates traffic to the brand's owned and shared properties. Plus, the posts live on long after the rebate has been paid out, generating clicks as long as they are still up.

How much does it cost?

There's no fee for installing the Social Rebate software, brands only have to pay out when their customers generate clicks through their messages. Social Rebate keeps 15% of all the rebates claimed by the brand's customers. While a few clicks generated through social media might not seem like a lot, Social Rebate makes the argument that given how much the brand invests, it's a huge return on investment. Social Rebate says on average, it's currently seeing a 30% conversion rate for the messages it generates on social.

Who's using it:

Larkin says the Social Rebate platform isn't really suited to large, well known brands since they already have maximum brand exposure, but it's especially cost effective for small businesses. “Small and medium brands don't have the marketing dollars, so for them, this is entire activity is funded by our retainer,” says Larkin. “We can get them out to a very sympathetic ear and help them grow sales, with as little money as they can spend.”

E-commerce site Gamma Labs, which sells natural supplements and energy drinks, says it ran a campaign through Social Rebate which was posted over 25,000 times on Twitter and got the site 1500 new customers. Another client, petfood retailer The Petway says it generated $2354.88 (over 5% of total sales) through Social Rebate, and paid out $495.84 in rebates, giving it a return of over 450%.

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