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a thought provoking article on why one needs to think about rebate strategy

An effective Rebate Management strategy has numerous benefits for the organization. It not only helps in increasing profitability, but also provides the opportunity to build stronger customer loyalty, better pricing advantage, and increased revenue. To achieve organizational objectives, it is important to have a robust Rebate Management Strategy.

 

Effective Rebates


Rebates are effective when the process of getting the benefits is easy. Rebate programs are an important element to engage customers and keep their interest in the organization or brand. While formulating rebate management strategies it is important to consider some of the following factors:

 

  • First and foremost is the effort, customers will leave the process halfway if they feel it is complicated for them to reap the benefit.
  • Customer confidence is another important factor to determine the effectiveness of the rebate.
  • Communication regarding the rebate and its benefit. Customers need to be aware of the rebate and the benefits, otherwise the whole point is lost.
  • Final pricing of the product or service post rebate.
  • The perceived value of the rebate received.

 

When do you redefine your Rebate Management Strategy?


While exploring new ways of managing rebates should be an ongoing exercise, it is imperative to change the strategy when you receive the following signals as an outcome of your existing strategy.

 

  • When there is a lack of visibility of business performance and profitability.
  • When you have inconsistence, varied, and contrasting customer feedback.
  • Complex agreements and alignment.
  • Manual data tracking and only a single source of data collection.
  • Ambiguity in explaining rebate benefits and communication to the customer.
  • The sales team needs to be fully trained and aware of the rebate benefits.

 

Redefining your Rebate Management Strategy


While creating the strategy, organizations need to define clear goals and objectives. The goals need to be developed in a way that the outcome is measurable. Secondly, whether the strategy addresses all the factors of effectivity or not needs to be considered. Another important aspect is data and past records. It is very important to measure and analyze past records to arrive at a strategy that is better and more effective. The gaps can be analyzed, and newer methods can be put in place. Apart from the past records, present data collected through surveys and integrated feedback should also be thoroughly examined for re-targeting or directing your efforts to pain points. Training the sales force in line with the strategy implementation is of utmost importance as that will create the desired impact if done well. Your organization needs to consider rebates as an afterthought, it must be embedded in the overall strategy. Investing in tools and newer methods of tracking rebates will reap desired results for the future.

 

After all, by increasing financial transparency, eliminating time-consuming manual processes, driving operational efficiencies, and mitigating business risks, rebate management technology not only promises to deliver better business outcomes but also fosters long-term and more meaningful partnerships for the purpose of mutual gain.


Price reduction or discounts are not viable and sustainable options. While that may be an immediate customer hook, this will not help companies to sustain their long-term profitability. It also means devaluing certain products and services which may have the potential in the future to grow and expand. But when a rebate is offered, it means that the value of the product or service remains the same, while there are special offers and incentives to buy it. It serves as an immediate motivation for customers to buy the product and engage with the add-ons that they are receiving in the form of rebates.


The rebate management strategy also needs to fit into the compliance framework and ethical ways of doing business. This is more focused on the process and the financial aspect linked to it. Engaging with a supplier base, and customers in a national, as well as international environment and the complexity involved herein, needs to be compliant with legal and governance framework.


Poor management of rebates can lead to loss of man hours, unethical behavior, manipulation, loss of customers, and incorrect records, hence the automated system can be a game changer to track and manage rebates in the most effective way. While defining the strategy, the major focust should be on the deployment of automated tools and systems to reap real-time benefits. Most companies have been focusing on digitalization in a big way and one of the pillars of digitalization is automation.

 

Rebate Management System is no longer just a part of advertising or promotion, it has a larger purpose and benefit that adds value not only to the financial profitability of the organization but is also advantageous for the customers. Getting the right tools for rebate management is the first step in right direction. O4S is ready to help!

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