Guest Blogger David Bakken: A Tale of Three Rebates
Like Don Peppers, I get steamed when companies intentionally profit from customers' mistakes. Banks and credit card companies draw a lot of fire for the high fees they charge, and we're beginning to hear about passengers slapped with checked baggage fees that can be higher than the airfare for a trip. But practically any company that offers a rebate on a purchase benefits from "breakage"--another word for customers failing to claim a rebate.
It's easy to understand the appeal of rebates to marketers. Rebates, like all other "discriminatory" pricing strategies, are a great way to segment customers based on their price sensitivity. But since the goal of any profit-making firm is to get the highest average price per unit, you can bet that expected breakage figures into the financial return for any rebate program.
As long as companies play fair, I can accept the fact that the financial return on a rebate program may depend on breakage, but three direct experiences make me think that some companies are making it even harder for consumers, especially those who buy from online retailers.
Case history one: MacMall. MacMall sells Apple products. Having bought a couple of iPods from this retailer, when it came time to buy an iMac I checked out its prices. I purchased from MacMall specifically because it offered a $50 rebate on the iMac. When you buy a rebated item from a brick-and-mortar retailer, you usually get a mail-in card or some other information about claiming the rebate. I expected to get that information from MacMall on how to redeem the rebate, either with my order confirmation or with the product, when it arrived. I finally contacted MacMall about four weeks after I received the iMac to find out how to claim the rebate. Oops--the program has expired--we're sorry, you're out of luck. Now, in fairness to retailers, rebate programs often come from the manufacturer. But, since only MacMall was offering the rebate, it probably deserves all the blame for this one. And any retailer passing a rebate offer through to customers has some obligation to tell them how to obtain the rebate. Of course, if the company doesn't care at all about losing a customer...
Case history two: Staples. I needed a new printer. Staples was offering a $50 rebate to anyone who recycled an old printer when purchasing a new one. No brainer here; do something good for the environment and get a good deal on the new printer. And Staples' online rebate system was great. I had my rebate sooner than I expected. So what's the problem? The rebate came in the form of a stored-value Visa debit card with an expiration date. I made one purchase of $20 and then sort of forgot about the card for while. When I tried to use it again, a couple of months later, I was told that it had expired. Sure, there was something in the fine print that came with the card (which I only read after this happened) about an expiration date, but revoking a rebate that you've already paid? Thumbs down to Staples on this one.
Case history three: Amazon.com. Same situation as MacMall. The product was offered with a rebate, but no information about how to claim it. When I contacted Amazon, its service rep informed me that the rebate had expired. But unlike MacMall, Amazon did the right thing by the customer and refunded the amount of the rebate.
It's easy to estimate the financial return from breakage on a rebate program. It's near impossible to estimate the future losses due to treating customers badly. Give that a thought the next time you plan a rebate program.
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David Bakken is author of The Customer Knowledge Advantage blog.
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