Rebate Technology

As is often the case I bought a few things this past week.  And as is also often the case some of the purchase came with rebates.  I don't like rebates.  Don't get me wrong I like saving money which is part of rebates.  I just don't like the concept of rebates.  When you're shopping they quote the price as if you get the rebate which of course you don't cases unless you remember to cut out all the necessary tags, circle the price, mail it all in and wait a couple of months.  What a pain!  Somehow it seems a little be unethical to quote a price "after rebate" knowing full well many people won't get a rebate.

Rebate programs cost companies money to run.  Advertising are rebate processing and significant costs and you would think that companies would find it less expensive to just lower the price.  However, the dirty little secret of rebates is that people will buy based on the low "after rebate" quoted price but end up paying the full price in some cases.  Some people will lose the tags/receipts, some will fill out the paperwork incorrectly and some will simply forget.  And that is what the companies are counting on.

This week I experienced 3 forms of a rebate program, one of which was new to me:

1. The first was the traditional form.  Fill out the form, write in the serial numbers, cut out the UPC codes, mail it in and wait for the check to come in a couple of months.
2. The one that was new to me was filling out an online rebate form.  I simply went to the web site  shown on the form,  filled in my name, address and some codes from the receipt and that was it.  Nothing to send in, just do it quickly online and wait for the check.
3. The third for is one I see all too rarely.  It was an instant rebate.  The amount was deducted at the time of purchase.  Nothing to fill out, nothing to do.  Now that's the best kind.

The online rebate form is an interesting use of technology.  If they aren't willing to make it really easy and just reduce the cost at least they've made it much simpler to get your rebate.  I suspect it has also lowered their processing costs.  Since it utilizes codes from the receipt it can verify that the purchase was made and meets all the conditions.  It in effect replaces manual verification with automated (and probably less expensive and more accurate) computer processing.  A classic win-win situation.

This is a classic case of utilizing the information you already have in your system (product purchased, amount, date, store, quantity, price etc.) and supplementing it with some additional information (name, address) and streamlining the process to everyone's advantage.  If they really wanted to make it truly streamlined, purchases with the company's credit card could be automatically filed and processed since by using their card they already have the needed missing information of name and address.

Now if we could just get them to buy into the concept of the instant rebate . . .

Although technically not a rebate I also saw another good example of this approach used to reimburse medical spending with a Flexible Spending Accounts (FSA).  In very simple terms the concept of an FSA is that you have your employer deduct pre-tax money from your paycheck and hold it in an FSA.  As you incur medial or childcare expenses you file against this account and are reimbursed.  The net effect is an income tax savings.

I'm most familiar with FSA reimbursement similar to rebate form #1 above.  You fill out a form, attach receipts, mail it in and wait for the check.  I've also seen a process called "streamlining" which a former employer used.  For prescription drugs it wasn't necessary to file.  The insurance company knowing when you got your drugs, the amount of our out-of-pocket cost along with knowing your FSA status automatically reimbursed you once a quarter.

This past weekend when helping my daughter go through the benefit information for her new job I was pleasantly surprised to see they've taken it one step further.  For prescription drugs the pay your out-of-pocket costs directly from your FSA to the pharmacy.  Under this scenario not only do you not have to file but you don't have to wait for reimbursement.  As long as you have unused FSA money the purchase is "free".  It is just like an "instant rebate".  How cool is that?

Again, another great example of utilizing the information you already have to improve customer service, reduce cost, and improve quality.

What other examples of this have you seen?

"Rebate -- August 14 2007" Photo by Lazy_Lightning

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