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Marketplace Morning Report

For many, rebates are worth jumping through some hoops

Jim Burress Feb 9, 2015
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Christmas was a smidge over ten weeks ago, and if you bought a gift that involved a rebate, chances are you’ve recently gotten a check in the mail — if you sent away for one.  

Manufacturers and retailers spend untold dollars every year trying to get us to pull the trigger and plop down our credit cards. Rebates are a tried-and-true motivator.

But to many consumers, rebates are like hoops – some are willing to jump through them to get some cash back; others, not so much.

“I’d do anything to jump through that hoop. I really would,” says Debbie Fitzgerald of Cumming, Georgia. “If it’s a rebate, I’m doing it 100 percent.”

Fitzgerald had already decided a few weeks ago to buy an LG phone from her local Verizon retailer. When the salesperson mentioned a $50 mail-in rebate, it was game on.

“It was like taking a test at the DMV,” Fitzgerald said of the submission process.

“I cannot fail this exam’ because I want my money back,” she thought.

With $50 at stake, it’s a safe bet most consumers would take the time to get it right.

But would we bite at, say, a few bucks?  

Maybe.

Harvard Business School marketing professor John Gourville studied the psychology behind rebates and how consumers view them when deciding on a purchase. He found people who want an item anyway often use a rebate to justify the purchase. In their heads, they effortlessly jump through hoops — cutting off the proof of purchase, taping it to a section on the rebate form, filling in serial numbers and slapping down a stamp – is no problem.

“You’re in a store. You look at a package and it says $5 with a $2 rebate,” says Gourville. “And you say, ‘Hey! That’s a pretty good deal. I’m getting 40% off!’”

So you bite and make the purchase.

But soon, reality sets in. The submission isn’t always effortless.  In fact, it can be a hassle.

“The cynical perspective is [rebate companies] prefer to make it difficult so you don’t actually redeem,” Gourville says. “I think that’s a fairly fair assessment.”

Built-in hassle was part of the process “in the past,” says Jason Atkins, CEO of 360Incentives, a rebate submission company. “There was a push to sometimes not have rebates fulfilled.”

But Atkins says manufacturers now view rebates a bit differently.

“In today’s world, with a rebate, you can have up to eight touch points with that consumer,” Atkins says. That’s in contrast to even ten years ago, when rebates usually involved one-way communication to a P.O. Box.

Now, much of the process is online.

For example, you can opt into text message updates to track your submission. Choose that, and the thinking is you’re likely comfortable engaging with a smart phone. Knowing such consumer information is valuable to companies.

With technology opening new doors, some – like Debbie Fitzgerald, who recently bought that new cell phone – wonder why it still takes six, eight, or even 10 weeks to get a check. The answer, says 360Incentive’s Jason Atkins, is fraud. “We find over 10 percent of claims are not valid,” he says.

Looks like rebate companies have their own hoops to jump through.

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