Canadian Marketing Blog

The high price of mail-in rebates

If you have ever gone through the process of sending in a "mail-in rebate" form, you know what level of frustration this can cause.

There is fine print to read, and deadlines to meet. You must remember to include everything that is required, or you will not receive the money. You invest your own time and energy, not to mention the postage stamp. However when you've finally completed all the work, you mail off your forms and expect a cheque back. In most cases you wait 8 weeks at a minimum. 8 weeks in a time when anyone can order almost anything from anywhere and receive it within a week.

I went through this process with a mail-in rebate offer from a major home improvement company. I had to purchase some paint one weekend and decided to go with a particular brand because the nice lady behind the counter suggested that there was a mail-in rebate offer of $20 if I bought 2 cans. Frustrations started when I received a letter back from the mail-in rebate company suggesting I was past the due date. I sent a letter back reminding them that I had sent it in on time and that even the date of their letter was, in fact, within the rebate due date. I received another letter stating that I had not included the correct information. I sent them a letter back reminding them that they had kept my original letter with all the correct information and proof of purchases. I received nothing in response.

I know that retailers "farm out" the mail-in rebate business to third-party fulfillment companies. According to this website the agreements between the two companies have a lot to do with guaranteeing the retailer that no more than a certain percentage of rebates will be mailed in. If there are more actual Customer rebate requests than the guaranteed percentage, the third party company will absorb the refund themselves. This doesn't convince me that these mail-in rebate companies are working in the best interest of the retailer or the Customer.

Retailers rely on the fact that the majority of people do not send in the rebate offer. The retailer gets the sales because of the rebate offer incentive, but is not on the hook for the full rebate amount. We are in an age where Customers are losing their patience and are looking for a retailer that can be open, honest and provide the best experience. There are too many retailers to choose from today. Those that still offer mail-in rebates are putting themselves at risk of losing those Customers in the long run for a quick one-time sale.

Is it worth it? Best Buy has decided it is not. They announced about a year ago that they will phase out all mail-in rebates. They are one of the first major retailers to realize what the rest of us have known for a long time. Mail-in rebates are good for sales in the short term, and bad for business in the long term. The long term plan is to implement the following: when you buy something at Best Buy, the "mail-in rebate" is given to you at the check-out counter. No forms, no proof of purchase requirements, no stamp and no waiting for 3 months to see if an invisible company has deemed your submission to be valid. In the mean time they have made things easier by allowing you to submit a rebate offer online, and track the progress.

If your organization offers mail-in rebates, perhaps it's time to ask your Customers what the cost is to their loyalty?

I was wondering if rebates might still be an effective tool for retailers and manufacturers.

One great advantage of a rebate is that it helps tracks consumers and provides information such as where they live and where they bought the item. But, the most important piece of information a rebate might provide is WHY the customer bought the item.

For example, a rebate could tell a manufacturer that the consumer saw a commercial/read an ad/heard a radio spot that mentioned the product and the rebate. This, of course, would tell the manufacturer to invest more in that particular marketing strategy over another.

I think rebates need to stop being used a ploy to make consumers think they're saving money, and rather as a way to measure the effectiveness of marketing, then they could be really beneficial.

Also, if the rebate process was greatly improved and made easier for the consumer, then I think more people would redeem them, which of course would provide more reliable results back to the manufacturer.

I think this could foster a stronger sense of loyalty with your customers, and would be a big gain for the consumer.

Do you think that rebates could have a benefit from this perspective? Or do you think they've had their chance and need to be phased out for sure?

James, you make some interesting points about other benefits to the rebate programs - points I had not considered.There could be some real value in voluntarily asking for consumer buying information in return for rebates. Thanks for sharing your ideas!

You are absolutely correct! I am currently waiting for a $150 rebate from a major PC manufacturer. After 8 weeks, I am frustrated that they have not returned my calls and their online checking system is broken. In reality, it's obvious the rebate processing is farmed-out to a 3rd party that has no incentive to keep the consumer happy. Given this poor experience, I will not purchase from this PC manufacturer again.