Make Rebates Easier for Customers

Patience may be a virtue, but it’s also a finite resource. As customers are painfully aware, most rebate payments take forever to arrive. How long, exactly? Eight to 12 weeks. Lengthy processing times, excessive paperwork and a lackluster customer experience long have been the hallmarks of rebate processing.

But it’s time for a change, as disappointing rebates have destroyed countless customer relationships, damaged brands and prompted several million-dollar Federal Trade Commission judgments.

Why are rebates so terrible? The traditional answer is that rebates are intended to be a hassle to discourage customers from redeeming them. After all, the more customers that forget or give up on rebates, the more dollars the manufacturer retains. Rebate redemption rates never hit 100 percent; they generally range from 5 percent to 80 percent depending on the value of the rebate.

While vendors have accelerated nearly every other aspect of the purchasing process in recent years – from overnight shipping to 24/7 instant chat support — rebates are stuck in the Stone Age to discourage redemption. Just last month in The Wall Street Journal, Gary Peterson, an analyst at ARS Inc., asserted, “Rebates are a good business plan only when consumers fail to claim them.” For companies with high-value rebates that understand the concepts of customer retention and lifetime value, this thinking couldn’t be more wrong.

It’s time to rethink the rebate:

· Rebates are a memorable part of the purchasing process. Companies that spend millions of dollars building a brand and generating product demand too often deliver post-purchase disillusionment with slow, painful rebates. Many manufacturers use rebates to lower the perceived price of a product without lowering its perceived value. For instance, when customers compare a $180 stereo to a $200 stereo (with a $30 rebate), they think they are getting a steal by acquiring the higher-quality, $200 item for $170. But that “steal” leaves customers feeling robbed if the rebate takes months to arrive or fails to ever appear in their mailbox. In the end, frustration over the rebate clouds feelings about the product and the manufacturer. Rebate disappointment proves especially damaging to service companies with month-to-month subscription models — a slow rebate can prompt service cancellation and loss of future revenue.

· Don’t burn bridges with valued customers and prospects. When using high-speed imaging, scanning and Internet processing technologies, the rebate process is swift, error-free and convenient for customers. Tech-savvy rebate vendors can turn around rebates in 10 days or less.

· Rebates offer a chance to thrill customers and build relationships. Given that rebates are notoriously slow, imagine your customers’ delight when just a few days after dropping their claim in the mail, they get a personalized e-mail message confirming its receipt and giving them a URL where they can check the real-time status of their rebate online. Moreover, picture their surprise when you exceed their expectations with a check that arrives in days instead of weeks. And if they reach out with a question, providing consistent, informed service across all service channels — Web, e-mail, chat, self-help, fax and phone — is the type of customer-care excellence that buyers crave. The few companies and rebate fulfillment houses that provide swift, effective rebates are delighting customers and earning repeat business. Loyalty begins with customer delight: A recent study by Purdue University’s Center for Customer-Driven Quality found that when a customer service experience exceeds a customer’s expectations, 95 percent will use the company again. Conversely, 63 percent of consumers will stop using a company’s products or services after a negative experience.

· Don’t pay the exorbitant price of a poorly handled rebate: support costs, reputation damage and government scrutiny. Rebates’ fine print, convoluted conditions and slow processing times all prompt customer calls and e-mails to the manufacturer, each of which incur costs above and beyond the value of the rebate. Moreover, as consumer frustration grows, so does the attention of government regulators and consumer advocacy groups. Though many companies outsource the rebate function, it is the manufacturer, not the outsourcer, who is held accountable for terrible service. Choose your partners wisely: Angry customers present a risk to future sales and corporate reputation, a high price to pay for sloppy rebates.

· Consider taking your rebates to the Web. Online rebate processing lets companies receive and verify claims online and provide credit to consumers via traditional paper checks as well as electronic payments to checking accounts. Customers love the speed and convenience of online processing, while manufacturers love the cost savings, often 33 percent less than traditional processing thanks to streamlined processes and reductions in data entry, check and postage costs. As a bonus, online processing drives customers to the manufacturer’s Web site for further sales opportunities.

· Rebates offer an invaluable opportunity to learn about your customers. They are a fantastic means to garner customer data and preferences for analytics and campaign reporting. Of the more than 100 million rebates redeemed in 2001, few were leveraged to collect demographic and psychographic information to enhance future promotions, implement loyalty programs, offer continuity options or improve cross-selling. Only by better understanding customers can manufacturers nurture and retain them.

Rethinking and revolutionizing the rebate is long overdue. A lousy rebate costs too much: loss of future sales, damaged corporate reputations, broken relationships, loss of learning and cross-selling opportunities, negative media coverage and government scrutiny. New technologies and processes give companies ample functionality to provide a faster, more accurate, personalized, flexible and supportive rebate experience.

Above all, rebates offer a chance for companies to deliver top-notch customer service and speedy payment to earn repeat business and deepen customer relationships. As processing innovation continues, smart companies will seek even more ways to make the rebate experience interactive, personal and rewarding for customers.

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