Considering a rebate program to drive engagement? Here's a primer to begin the process.

Who doesn't love the promise of "found money?" That's the basic idea behind rebates, and it's one reason why they can be so effective in both the B2C and B2B realms, regardless of whether the promised money is found or not.

A study by the Promotion Fulfillment Center, a provider of turnkey solutions in fulfillment, e-commerce, rebates, and other promotions services, found that 95 percent of consumers are interested in products that come with rebates, 80 percent look for rebates when making purchases, and 57 percent feel that rebates are easy to redeem.

However, a high percentage of rebate offers are never redeemed, and in a significant percentage of cases where they are redeemed, the rebate check is never cashed. That lowers marketers' costs for rebate programs, but it does not dilute their benefits.

"The strategic feature is the ability to engage and interact with the [customer] after the sale," says Ed McMasters, director of marketing and communications at Flottman Company, which provides miniature folding and printing services for pharmaceutical, medical device, and consumer packaging industries. "It takes effort on the part of the purchaser to send in the required materials to take advantage of the offer. This demonstrates loyalty."

While integrating rebates into an overall marketing strategy is a complex undertaking, the rewards can justify the effort. Research conducted by the Aberdeen Group identified several competitive advantages experienced by companies that use reward-based promotions such as rebates to drive engagement and purchases. Some of the study's findings include:
  • Higher annual revenue and greater profitability per customer result from using reward-based promotions compared to using discounts. Surveyed companies reported an average year-over-year revenue growth increase of 36 percent attributable to reward-based promotions versus 28 percent attributable to discounts. Use of reward-based promotions also generated greater average profit margin per customer (24 percent for reward-based compared to 18 percent for discounts).
  • Businesses use reward-based promotions to achieve specific business goals, including fostering customer engagement, driving purchase intent, driving sales lift and/or purchase frequency, and minimizing lost revenue potential due to discounting.
  • Reward-based promotions elevate brand image. Forty-three percent of companies surveyed consider using reward-based promotions when they want to create the impression of a premium brand image rather than a price-driven discounter. When competing directly with a rival on brand image, 44 percent of businesses prefer to use reward-based promotions.

Program Choice and Structure Are Important