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End Of The Road For Consumer Rebates?

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End Of The Road For Consumer Rebates?

Black Friday is back this week and the consumer goods marketplace is buzzing with special offers designed to create a massive retail sales spike. In fact, Black Friday continues to be the time of year where many companies offer their most significant incentives of the year, and here in 2015, the majority of these are still presented via consumer rebate programs.

What happens, though, if rebates start to lose their effectiveness? The reason this question is worth examining is not because I am predicting some rebate apocalypse. However, we now have access to data that shows a rebate is not always the most effective catalyst for that sought-after spike at retail. 

Social and economic factors

Just as all humans are unique, so too are their needs – and different amounts of money mean different things to different people. We can't know for sure without testing what level of incentive is going to change buying behaviors in a given marketplace. As any successful manufacturer of luxury goods can attest, there are always going to be times when price just isn’t a factor. Again: different people buy with different considerations in mind. If you’re selling in a category that is less price-sensitive, it makes more sense to allocate spend to MDF/co-op dollars or an incentive to key salespeople.

Conversely, in regions where price is the most important driver of sales, a rebate will still most often move the needle.

Collecting relevant claim data for each rebate claim provides the ability to measure previous program performance based on a large amount of historical data. Overlaying program performance data with census data heat mapping helps brands deploy custom programs optimized to the unique facets of each marketplace into which they sell.

Competitive landscape

Another major factor that determines the effectiveness of incentive tactics is a brand’s retailer/dealer network and how it operates. Your field sales people can give some preliminary information about the storefronts they service and answer some important questions (what’s on their signage, what stock levels do they carry, which brands are most prominently represented within the store).  Measuring and interpreting incentive program data can tell the rest of the story.

The more programs you have to draw data from, the more you can see which resellers are most aligned with your brand. This visibility helps make determinations about how best to offer incentives.  For example, say your goal is to grow market share with a partner and displace a certain competitor. It is then wise to use incentive spend to start building alignment at the store level, throwing your budget behind push programs.

Program agnostic, results focused

For the foreseeable future, Black Friday is likely to continue to bring out swarms of price-driven consumers. The point here is not that rebates are dead or even dying, but that it’s important to start determining incentive strategy using data-driven decisions – and to be open to changing tactics, deploying programs that are optimized and marketplace-specific.

The future that companies now need to accept and get to work on is this: computing power has finally reached the levels needed to parse massive datasets with relative speed and ease. What does this mean for the channel marketing professional? The promise of big data applications for our industry is the ability to pull analytics from past programs and build predictive models of which programs will work best, along with when and where they should be implemented. It allows us to become program agnostic in our work, as we can become data and results-driven with relative ease and absolute certainty.

Bring in the data – smart data application leads to smarter incentive strategy.

A lifelong technology entrepreneur, Jason Atkins is the founder and CEO of 360incentives.  360incentives is the world’s first integrated incentive software platform, allowing brands to run spiffs, rebates, co-op/MDF, and sell-through allowances all processed and paid with 100% audit and powerful analytics to predict what to do next.

For more information, visit: http://www.360incentives.com.

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