Why Rebates Alone Don't Guarantee Brand Loyalty

We are all consumers. And as consumers, we all know about manufacturers' rebates and retail specials that help drive our interest in products. Rebates have ruled in marketing for as long as manufacturers have moved product. And they work: More than $76 billion in rebates is processed annually, according to some estimates. But while rebates may help close the sale, they are not enough to build true brand loyalty.

Here's the thing: The present model for processing rebate claims has built in an allowance for breakage. Breakage, of course, is the expectation that about half of all rebate claims will not be fulfilled for one reason or another. Statistics range from just 10 percent to 30 percent of rebate claims coming to fruition (in electronics), according to PC Data, to a high of 50 percent to 60 percent fulfillment, according to NPD Group. We need to change the way we handle rebates and work toward 100 percent redemption rates.

Brand loyalty and lifetime customer relationships are built on emotion—specifically how your brand and products make your customers feel. Having worked in both managing sales commissions for great salespeople and in fulfilling rebates (we have processed more than 10 million such transactions to date), it is my experience that consumers and salespeople have emotional attachments to brands and manufacturers that not only pay them back (e.g., sales incentives), but that also provide a superior overall brand experience.

According to the National Retail Federation, "From the customer's viewpoint, the experience is the ultimate conveyor of value to him/her, as well as a primary influence on customer behavior. It follows that, all things being equal, an optimized customer experience will cause a customer to repeat (if not expand) purchasing with a particular organization."

The notion of a one-to-one customer relationship (is) giving way to that of a one-to-many (segment-based) relationship. Yet the intimacy of one-to-one is not lost. It is provided through "mass personalization" techniques. Through technology, one-to-one becomes easier to scale and makes building meaningful connections with your customers easier. By engaging in a rebate relationship with a retailer and manufacturer, consumers show they are willing to provide personal data to inform remarketing efforts to help shape future sales. Such data is invaluable. Just ask Amazon about forging those online relationships and calculating consumer interests for upsell opportunities. The onus is on us as an industry to continue to add value to the lives of our cherished consumers and show them that the relationships they have with our brands can be symbiotic ones.

So let's retool our approach: The industry phenomenon known as breakage needs to be stopped. As part of the rebate process, consumers are often asked to perform unnecessary tasks with the idea that somewhere along this journey, their focus on rebate redemption will fall away. Even with some of today's online submissions, verification and authentication take time for manufacturers and rebate clearinghouses. On average, it takes a minimum of six to eight weeks. If a rebate is offered, today's data capture and chain of custody programs using cloud-based technology means processing can be fast and seamless. The fact is, a consumer who has purchased your product has already honored his or her end of the bargain.

Let's start a "rebate revolution." Let's start by honoring all qualifying rebate claims. Let's make it easy for the consumer by using technology. Your in-store tablets and electronic communications start the process to track and trace rebate claims. Let the rebate process become an extension of an engaging and positive purchase experience and the beginning of a long and happy relationship with the brand.

Jason Atkins is the CEO of 360incentives, which has been recognized as a Fast 50 company by Deloitte and by Profit magazine for fast growth.

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