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Experts on Call:
"How can we use rebates to delight and retain customers, instead of frustrating and confusing them?"

Response by Channing Rollo, Business Intelligence Manager, ClientLogic
December 23, 2002

'Tis the season and rebates are everywhere, from electronics and apparel to sleigh bells and figgy pudding. But when the gifting is over, how long will it take for customers to receive those holiday rebates? If you answered eight to 10 weeks, you're right on the money. Slow processing times, excessive paperwork, and a lackluster customer experience have long been the hallmarks of rebate processing. But it's time for a change -- disappointing rebates have destroyed countless customer relationships, damaged brands, and prompted several million-dollar FTC judgments.

Why are rebates so terrible? The traditional answer is that rebates are actually intended to be a hassle to discourage customers from redeeming them. After all, the more customers who forget or give up on rebates, the more dollars the manufacturer retains. Rebate redemption rates never hit 100 percent. Redemption rates 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 still stuck in the stone age to discourage redemption. Just this month in the Wall Street Journal, Gary Peterson, an analyst at ARS, 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 and reinvent the rebate:

Rebates are a memorable part of the purchasing process--a powerful final impression that impacts product satisfaction and brand perception. 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 believe they are getting a deal by acquiring the higher quality, $200 item for $170. But that "deal" leaves them feeling robbed if the rebate takes months to arrive or fails to ever appear in their mailbox. In the end their frustration at the rebate situation clouds their feelings about the product and the manufacturer. Rebate disappointment is especially damaging to service companies with month-to-month subscription models -- a slow rebate can prompt service cancellation and loss of future revenues.

Don't burn bridges with valued customers and prospects--delight your customers and earn their loyalty with a fast, convenient rebate experience. 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 are an opportunity to thrill your customers and build relationships, so provide a fast, convenient, and easy rebate with ample customer support. 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 email 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 happen to reach out with a question, providing consistent, informed service across all service channels--Web, email, chat, online self-service, 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 their 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 based on 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 emails 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. While many companies outsource the rebate function, it is the manufacturer, not the outsourcer, who is ultimately 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 enables companies to receive and verify rebate 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 an added bonus, online processing drives customers to the manufacturer's Web site for additional sales opportunities.

Rebates offer an invaluable opportunity to learn about your customers. Rebates offer a fantastic means of garnering 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 in the end: 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 provide companies with ample functionality to provide a faster, more accurate, personalized, flexible, and supportive rebate experience.

Above all, rebates offer an opportunity 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. And you can take that to the bank!

Channing Rollo, Business Intelligence Manager and Founder of thinkBIG at ClientLogic, is responsible for analyzing and reporting on customer management industry trends, fulfillment, eCommerce and the CRM competitive landscape. Rollo's compositions and commentary have appeared in numerous leading trade publications, including Outsourcing Journal, Call Center Magazine, Customer Service Management Magazine, ZDNet, DMA's The Bottom Line, CRMguru, DM Review and FierceCRM. Rollo joined ClientLogic in March 2000 as an eBusiness Analyst before being named Manager of Strategic Marketing & Communications. Prior her service at ClientLogic, Rollo worked for two Washington, DC think tanks and Tropicana Products, Inc.

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