Incentive breakage has been a favourable tactic used for years by organizations that attempt to remain within budget. As time progresses however, and with a large influx of customer complaints, terrible reviews, and loss of brand trust, budgeting for breakage in a rebate program has become outdated, useless, and a publicly discrediting relic of the past.
Are You Aiming for Breakage?
Too often rebate campaigns are designed with built-in “breakage” rates as high as 50%. The idea of breakage however, is misleading; although at first it may appear to save you capital, the long term effects can ultimately drain your bottom line and cost you valuable lifetime customers.
Building-in breakage in your rebate program means you are using any of the following tactics:
- Providing customers with terms and conditions that are tough to read or understand
- Relying on 100% postal mail for claim entry and payment
- Offering only a P.O box as the consumers point of contact
- Offering the customer with a toll-free number with attendants who are un-empowered and/or unhelpful, or
- Offering claimants with absolutely no visibility into the status of their claims.
The consumer-driven economy has created customers who demand fast and engaging experiences. Which means, if you’re using these tactics and aren’t providing the best service possible, you run the risk of narrowing your channels, decreasing sales and weakening brand perception. This results, in the loss of valuable customers who won’t return to your brand and who won’t endorse your product.
The purpose of breakage is to save a brand capital with your rebate campaign, yet engaging with customers in a difficult and discourteous manner will just create frustration, diminishing future wealth and brand advocacy.
The Power of the Internet
On top of losing valued customers, their opinions on the negative experience they received from your rebate submission process can gain traction online. With the emergence and avid use of online social tools – dissatisfied consumers now have a place to turn to for relief.
The power of the internet and the use of online social tools, has enabled customers to become their own media brand, publishing content online in forms of blogs, review sites, videos, podcasts and, of course, social posts. There is no barrier to anyone growing their reach by providing high quality, interesting and novel content that is rewarded by engagement.
Providing poor customer service thus enables brands to quickly lose control of the public’s perception of their brand and, if handled incorrectly, the downward spiral of perception can even lead to a downturn in the company’s stock price.
The Cost of Breakage
It all comes down to the question, is breakage worth the loss of a lifetime valued customer?
Neglecting and losing the trust of a customer means you’ve lost them for life. Not only will they not be a repeat buyer (which comes out of your pocket) but their word on their experience will spread – fast.
The cost of purposeful breakage is that your brand doesn’t just risk losing one customer, but also the interest of every person who they are connected to. Breaking a single person’s trust can then wave into breaking the trust of their friends, family, and followers, because people trust their networks and those they feel connected to.
Leading With Lifetime Value
It goes without saying that in order to deter negative backlash and the tarnishing of brand reputation, focus on delivering the best possible experience. Bring delight to the plethora of customers who have trusted your brand by purchasing your products and who count on you to deliver on the promise of your rebate offer. Eliminate breakage, and drive true brand advocacy with your promotions.