Mar 30 2009
When Is a Rebate Not a Rebate? Part I
This post might not seem like it’s related to Business Intelligence at first, but stay with me to the end and I promise I will tie it all together. 🙂
Have you ever purchased a product that came with a coupon that you had to mail in? The idea is that rather than drop the price on a product a company will offer a rebate or other incentive to encourage you to spend your money. There is cost (overhead) involved in processing the rebate, so why don’t they just discount the product to begin with? A few months ago I got a new Blackberry phone (love love LOVE it, by the way). It was $200 but came with a $100 rebate. Nice deal, right? Not so fast. It seems that the rebate wasn’t quite cash in my pocket. It was a $100 “credit” card that I could only use at certain stores. Best Buy couldn’t figure out how to use it, but Walmart could. I eventually got to spend the entire $100 but it took extra effort. And that’s the issue here, the fact that consumers need to make extra effort on rebates.
Several years ago I worked for a company (as a client) that processes rebate requests. (This is one of the reasons I enjoy my job; I get to see all sorts of companies in different industries and learn how they work.) What I learned at this job was that all of those different companies that offer rebates for purchases don’t process the money themselves. Instead they hire one of the few companies that specializes in this area. Here is how that process works, at a very high level.
First, the product company determines the product(s) involved. Then they will talk to the rebate processor to get input on how much the rebate should be. Based on that meeting they will set up the rebate program, which the rebate company then gets paid to manage. Why would they do that? Why would company “A” ask company “B” how to price their product? That’s where the BI comes in. Continue reading “When Is a Rebate Not a Rebate? Part I”
