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Mail-In Rebates: Annoying Customers, One UPC Code at a Time

2014-07-April-Jumping-through-hoops.jpgHey Procter & Gamble, you can keep that $15 prepaid card you tricked me into earning by buying $50 worth of your products. I've never had much talent for jumping through hoops. And frankly, a lousy $15 is too little of an incentive to force me to learn now.

Funny how a company that allegedly takes its love of its customers very seriously is still forcing them to use mail-in rebates — even for products they purchase online.

Oh, I gave it a try. I printed the rebate form, filled out my name and address, and even scrounged around for an envelope and a stamp. But when I realized I needed to cut the UPC codes from the boxes of all 10 products I purchased  — and then write those same UPC numbers on the form — and then go back and print the receipt from my online purchase — and circle the prices of all the items in question — I gave up.

Who in this age of real time marketing, omnichannel experiences and digital everything has the time to be patient? 

Not me. 

Who Wins With Rebates?

The Aberdeen Group estimates 50 percent of retailers and almost as many manufacturers (48 percent) use rebate programs as part of their customer loyalty and promotions mix. According to research it released in 2011, the top benefit for both retailers and manufacturers is customer retention (50 percent), followed by ROI (50 percent) for retailers and customer conversion rates (46 percent) and customer engagement (42 percent) for manufacturers. 

It's worth noting that this pro-rebate research was sponsored by Parago, a provider of rebate programs and other promotions and rewards. 

In the real world, the benefits of rebates are arguably less clear. Consider this: For more than a decade, I worked side-by-side with one of the country's premier consumer columnists, helping to track and resolve consumer complaints. Based on that experience, I can say categorically that retailers and manufacturers like rebates more than customers. 

From the enterprise perspective, rebates can generate additional sales and, unlike a discount offered at checkout, provide an extended "float" on some portion of the sales revenues.

I'm a prime example of this consumer behavior: I bought an extra $10 worth of P&G products during my last visit to Drugstore.com simply to qualify for the rebate. I assumed, incorrectly, that I’d be able to quickly and easily apply for the rebate online, thereby significantly reducing my total cost.

Everyone likes a bargain, after all. So, yes, a rebate is a good way to hook customers. But it is a very unreliable way to keep them or create any form of customer loyalty — unless the promotion is done right. And often, they are not.

Lost, Forgotten and Never Received

You don't need a degree in market research to know many rebates are never redeemed. A 2006 study estimated as many as 40 percent are not redeemed either because consumers fail to apply for them or their applications are rejected — saving retailers and manufacturers more than $2 billion a year.

Some consumers forget to apply for the rebate, resulting in something the industry defines as breakage — Or "the percentage of customers who don't seek to redeem their rebate, usually because they, well, just don't …"

Between breakage — customers who never apply for rebates — and slippage — customers who fail to cash their rebate checks — companies profit at the expense of their customers. 

'You Forgot to Circle the Price'

Industry experts contend many customers are just unsuccessful rebate redeemers. Some make mistakes when they submit their rebate forms. For example, they may forget to include an original receipt or UPC code from the product packaging with the rebate request.

They may even do something as trivial as underline the price on the store receipt rather than follow rebate instructions to circle the price. Any error, however slight, can cost the consumer the rebate.

In some cases, customers lose their rebates even when they do everything to get it correctly. This can occur when the retailer or manufacturer goes out of business, the rebate fulfillment center makes a mistake or from fraud in the rebate promotion.

It got so bad that in recent years a number of states, including New York, passed laws to curb deceptive, onerous and condition-laden rebate offers. Some states have also strengthened federal regulations affecting rebate fulfillment, including the time it takes to collect a rebate. Under the federal Mail Order Rule, companies are required to mail rebates within the time promised on the rebate form or, if no time is promised, within 30 days.

 

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