Watching the Vice Presidential debates, there was a lot of talk from both sides about bolstering the hopes and fortunes of the middle class. This struck a chord as I reflected on my shopping experiences that same day and realized that retail marketers rely on several promotional tactics that, in our opinion, aren’t truly designed with the customer in mind.
Extended Warranty Protection Plans, Same-As-Cash deals, and Mail-in rebates are all on the suspect list but Mail-In Rebates are the focus of this post. Designed originally as a deferred discount to distract consumer eyes from the “real” price of the product, mail-in rebates came into view years ago and continue to proliferate throughout retailing. Today, they have proliferated across product and category to the point where consumers can’t just rely on reading the “price” shown in big bold type, but need to look at the fine print to see what conditions apply to enjoy the stated price.
Two quick stories will have you nodding your head as they illustrate customer experience in mainstream retailing:
- Needing to replace a mobile handset for a family member, I called the “help” line to find out what deals were available. I was given the prices of specific phones that I was eligible to acquire and was told that a $75 early upgrade fee would apply. The phone we selected totaled up to $125. This price was in my brain when I walked into the wireless store only to learn that it was net of a $50 Mail-In rebate. End of story…..I paid $175 and walked out with a new handset and a rebate form to complete.
- My 19” computer monitor was on the fritz and I had no choice but to shop for a replacement. Prices for 22” monitors ranged from $179 – 295. When my frugal Irish eyes looked more closely at the $179 model, I noticed that the price was net of a $50 rebate. Next to it was a more attractive model with bigger brand name. Since the price was $249, I struggled with the wisdom of paying a higher price and not having to take my rebate “homework” with me. End of story……I am still shopping.
The attractiveness of Mail-In rebates for marketers is summed up in one word: breakage. The burden of cashing in on the rebate falls solely to the consumer. Completing the paperwork properly, including the right documentation, mailing before the expiration date, and spending additional money for delivery confirmation stacks up in favor of the retailer. It is a game that can be played successfully by consumers, yet many of us don’t have the discipline to follow through properly. The fact that Mail-In rebates continue to be a popular pricing tactic is testimony that breakage does benefit the retailer.
From what I have learned about Millennial (Generation Y) purchasing behavior, I wonder if breakage rates will go sky-high across this 80 Million person group. Maybe the only hope for this upcoming generation is out-sourcing. I’ve seen pet-sitters and dog-waste services advertised in the local paper along with cleaning and yard services. Maybe bookkeepers need to add rebate processing to their list of services.
Responsibility lies on both sides of the transaction and consumers need to be educated and disciplined when making purchase decisions. Marketers might consider this Loyalty Truth: whether this is the type of relationship they wish to promote with their customers over the long term. As they continue to employ tactics that force consumers to be detail driven in order protect their interests, the chances of building enduring brand loyalty will be diminished with each transaction……Bill Hanifin