How To Use Consumer Rebates As Powerful Sales Tools

A few years ago, I chose to work in the car business for a while.   I had decided that I really wanted to learn more about sales and the car business seemed like a great place to learn what I needed through immersion and it really was a useful learning experience.

One of the toughest things about doing a great job of selling in that business is sorting out which vehicle is going to truly best suit the customer’s needs.   As you are working away, showing your products to the buyer and watching them get excited about possibilities it is easy for both parties to lose the plot, getting distracted by other elements of the deal such as payment and hot-looking cars that don’t necessarily match the day-to-day usage the person has for their future vehicle.  And so, keeping focused on getting the person a car that will best suit their needs becomes a central discipline to doing a good job of helping that person.

So it goes too with channel marketing incentives – with the ability to provide customized programs, you have the opportunity to show your partners that you care about them by taking the time to create programs that are harmonious with how your partners operate and tailor sales incentives to their particular needs.

Consumer rebate programs have become a great levelling tool, helping brands protect their retailers in all sorts of different marketplaces by offering the customer a cash incentive for choosing the brands product at retail.  Just as not every brand and not every customer are the same however, a single rebate program is not going to be equally effective for driving sales at all retailers in all marketplaces.   Here are a few simple principles to keep in mind when designing your programs in order for them to have maximum effect:

Price Sensitivity Of The Category

The world is changing; there is no sense fighting that.   A major factor affecting manufacturers and retailers alike is inexpensive off-shore goods changing the competitive landscape in so many marketplaces.  Couple this with the proliferation of mega-retailers such as Wal Mart, Home Depot and the like and you have some serious new considerations about what controls the price of products in a category.  In fact, in recent times even brands who have historically been considered premium or super-premium have started offering special makeup units (SMUs) for mega-retailers because the buying power of some of today’s mega-retailers is bigger than the brands’ entire company.   This can cause consumer confusion at point of sale where the brand equity of the previously super-premium brand may factor more heavily into their decision although you may be offering a product that is incredibly featured up for the price bracket it is in.

Many marketplaces are tiered when it comes to pricing and companies have become used to making sure they have a solid offering for each price tier but even then you may sometimes need to compete on price to achieve your objectives at retail.  A rebate is most useful to your retailers when it helps them compete on price without having to compromise their own margin.


Social Graph Of The Marketplace

Oh hi, Internet…what’s that you’ve got for me?   Socioeconomic data about the marketplace that my retailer is selling into?   How useful.

By now, you have probably invested loads of time into figuring out who the buyer is for your product.   Considering buyer personas is a potent way to refine your offering, including your rebate programs.   A bit of searching around the Internet can usually provide you some high level data of your partners’ marketplaces so since you’re taking the time to create a custom program for your partners, why not bump data on your buyer personas against broad statistics about the people most likely to be engaging with you rebate program.   The less variance from your ideal buyer, the less friction your retailers are likely to have making the sale.  Conversely, the greater the variance between the demographic data and your ideal buyer, the more you can tinker with your program to make it appealing to the folks and bridge that gap. Then test, measure and repeat.

How Are The Salespeople Being Compensated?

If you are marketing to your channels and you don’t have any idea what sort of comp plan their salespeople are on, it is truly tough to build effective incentives.  Knowing how the front line sales reps are being compensated is critically important in effective rebate campaign design.   I have had the good fortune to interview many retail sales associates throughout North America, specifically discussing the areas of sales incentives and compensation.   From anecdotal data based on the hundreds of calls we answer each day at 360, I had an idea that some people are counting on sales spiffs to make up around 60-70% of their income.   In the course of many interviews I have encountered people who make everything from no spiffs whatsoever to those who say spiffs make up a whopping 90% of their income.

In cases where the salespeople do not have access to manufacturer spiffs, they are going to view a rebate program most favourably as a tool for getting a deal done.   Likewise, if they receive no spiffs but are paid commission, they are going to love your rebate program even more as it helps them protect the stores’ margin which they are statistically accessing around 25% of for their commission.  You are going to make both of these people very happy.

The opposite is true, of course, in a situation where sales associates earn and even expect spiffs; a consumer rebate program on its own is going to fall to the margins as the salespeople focus on selling brands who are more in touch with their needs.

Last week, we published an infographic titled 10 Ways Technology Can Enable Customer Loyalty.  If you are reading this article, chances are you already care a lot about doing a great job of creating effective sales incentives and so I highly recommend having a look at the infographic for inspiration to help you build more engagement as your continue to refine your programs and create new ones.