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Beating the rebate runaround, Part 4

An insider shares rebate secrets and offers a better way

Small Business Tech By James E. Gaskin, Network World
March 01, 2004 12:17 AM ET
James Gaskin

Network World - Customers who redeem product rebates spend three times more money than those who don’t.

That fact, and other secrets of the rebate business comes from Chris Quinlan, co-founder of PlusNetMarketing in Wilmington, Del. Quinlan, who’s been following our “rebate runaround” series, has had to bite his tongue until the patent for his rebate process came through in mid-February. But now he’s free to give us some great insider information on the rebate business and share his plan for making it much more consumer friendly.

Why does it often take rebate checks 10 to 12 weeks to arrive? Because that paperwork you mail to a P.O. box is typically shipped overseas to a keypunching service. There, your bad handwriting and faint register receipts are read and entered by a low-wage worker with no accountability to the customer or the manufacturer. With a process like this, mistakes are guaranteed.

Why do some rebate processing companies love customer complaints? Because they bill the manufacturers for customer service contacts. For this, we blame the manufacturers that sign a contract that rewards bad customer service.

Why do manufactures resist electronic rebate programs? Because they assume the redemption rates will be higher, costing them more money.

What is the redemption rate for rebates? It varies by industry, product and percentage off the product price, but 80% is a fair estimate, Quinlan says.

(Hey, vendors, run the numbers. The fees you pay to a rebate fulfillment house are eating up the money saved from the small percentage of rebates rejected. You’re out the money anyway, and you’ve created a mob of angry and vocal former customers. Is this any way to run a railroad?)

Quinlan believes his new patented rebate process will ease complaints considerably. In real-world development for five years, the process ties into the retailer's point-of-sale system for the critical information, so customers don’t have to mail in receipts.

Instead, customers apply for rebates online or through an automated voice response telephone system, supplying identifying numbers from the receipt, such as date, store number, register number, transaction number, UPC number and serial number. Retailers and manufacturers decide which information to require. Within one to seven days, PlusNetMarketing tells the consumer his or her rebate status. The retailer and vendor audit the PlusNetMarketing rebate transactions and get the results in the same time frame. Checks arrive within three weeks of the end of the rebate period.

RiteAid Drugstores use Quinlan's service to run a monthly rebate program as part of its customer rewards program. Customers can check the status of their rebates online and learn of any problems — like if a customer buys two bottles of Windex but needs to buy a third to qualify for a $5 rebate. In February, Rite Aid offered 157 products with rebates totaling $528. Rebates are tallied up each month and sent to the customer in a single check.

Although Quinlan says he’s seen no noticeable difference between paper and electronic redemption rates, he has received numerous letters from RiteAid customers who switched from other drugstores because of the simplicity of RiteAid’s rebate process.

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