Holly Oegema is a student in Software Engineering studying at the University of Waterloo. Currently she is working on the 360Insights development team as an intern.
It’s a great day.
The sun is shining, the birds are singing and you just bought a brand new Thingamajing 3000. You come home and eagerly rip it out of its packaging and then you notice a small slip of paper fall out of the box and onto the floor. You pick it up and peer at the small font and a striking message stands out “Save $50 on the Thingamajing 3000, after mail-in rebate.”
You jump for joy, there is so much you could do with $50.
That’s when you notice the terms and conditions of the rebate:
‘Simply send proof of purchase with a lock of your second cousin’s nephew’s son’s hair, place in neon coloured green envelope wrapped with a pink bow and thirty stamps, in which two of them are from Africa. Please seal the envelope using water found in the seventh ring of hell and please include the fingerprints of your great great grandparents.”
The reason for this is that, hopefully, the idea of the rebate will entice you to buy the product, but the difficulty of the rebate will persuade you to not actually follow through with it. What companies who offer these unduly complex rebate terms are hoping for is called “breakage” and “slippage” in program participation.
Faced with scaling the complicated wall built upon the classic mail-in rebate process, it is very easy to see why many rebates go unclaimed.
So, what is the benefit of modernizing the rebate and making it more accessible? Well, first of all, the people buying the product will be happier because they’ll actually get the rebate that might have played a part into their decision to buy the product. On the surface though, from the company’s perspective: easier = more people doing it = company pays more money.
From a financial perspective, it’s hard to see the benefit for the company offering rebates.
Let’s start with the easiest aspect that comes to mind:
It doesn’t take a rocket scientist to deduce that when someone has a good experience, they’re most likely to do it again. If you go out to a restaurant and the food is good, the service is great and you had an overall wonderful time, you’re more likely to go again. On the other hand, if you go somewhere and service is slow, the staff are rude and the meatloaf you ordered is actually the neighbour’s cat. You’re going to be more reluctant to go there again.
Positive experience often leads to positive association. Let’s say I buy two very similar products from Company X and Company Y. Both offer me a $100 rebate. Company X provides a very easy online process that I can just log in, upload my proof of purchase and get my money within 2 weeks. On the other hand Company Y offers the rebate through the mail-in method and the process is a lot more difficult. If I were to carry out both rebate processes I am more likely to associate positive feelings towards Company X due to their easy process. I’m more likely to associate feelings of frustration with Company Y. In the future, when I go out shopping and I see another product that’s offered by Company Y and Company X, I would be more likely to buy the one offered by Company X because of my previous positive experience. No one is going to be thinking, “Oh man, that really frustrating experience I had with Company Y just makes me want to go out and buy all their products!” (For more on this idea, check out Three Ways Mobile Is Changing Canadians’ Expectations by the people at Think With Google.)
Data Collection/Data Integrity
Second, and this is the piece that’s arguably creating the most value for brands who have figured it out already: it’s much easier to collect data from digital sources over paper sources.
As mentioned earlier, easier rebate process = more people doing it = company pays more money. That’s true, but when more people are doing it, this means that there is more data on the people buying your products.
“I want less information on the people buying my products!”, said no one ever. Want to know if that ad you ran actually led to more people buying your product? Or if your efforts to persuade a certain age group to purchase something are working? With more data it’s easier to answer these questions. The beautiful thing about having lots of data is the ability to see trends and see which tactics are working and which tactics are not. Sure, you might be spending more money on rebates, but you’re also getting more data on the people buying your product.
It’s also much faster and easier to process an online rebate over a mail in rebate. This means that the cost per rebate processed goes down.
Rebate Fraud Reduction
Another wonderful thing about data and the digital age is it makes it a lot easier to validate things. It’s a lot easier to sift through digital data than stacks of paper, and because of this it’s a lot easier to detect fraud. This means that your company will actually be saving money, because you will only pay money out to people who actually bought your products as opposed to any random and sneaky folk.
There are a lot of benefits with creating an easier rebate process, increased customer loyalty, more data, faster fraud detection, and cheaper processing.
Final thought: it’s hard to convince people that your brand is creating innovative products that are paving the way in the new age when you use an outdated system that screams otherwise.