Does a rebate earn loyalty? How can you re-allocate rebate costs more effectively

02/12/2022

Rebates are used in many sectors to encourage repeat purchase, greater frequency of purchase and long-term repeat business.  In the US alone last year approx. $500bn worth of rebates were awarded to customers.

 

This tactic is generally focussed around a business’s best and most valuable customers, i.e. The more you spend, the greater the reward, with the advantage of locking in a group of customers that generally contribute most to a business’s net margin and ultimately profit.

 

In some sectors rebates are almost an industry accepted standard. By not offering a rebate a business may exclude themselves from basic opportunities. And in markets where competitors are struggling for a point of difference, rebates can offer a tempting tool for business owners who may invertedly trigger a sequence of more significant rebate discounts that will lead to a loss of value for all.

 

Many rebate incentives also suffer from barriers to participate. Simplicity is a must (especially with small businesses) as is access. If customers have to jump through hoops to take part, they often won’t. Correctly marketing an offer plays a significant part, as any customer facing material needs to simplify and inspire in equal measure.

 

How do customers define loyalty?

 

So, with all that in mind, does a perfectly created and marketed incentive rebate programme generate customer loyalty? Whilst there is significant evidence to show the commercial impact (and many examples of industries where these schemes are prevalent) there is little indication of any generation of long-term engagement or emotional attachment that will stop the costly switching of spend when customers are confronted with a better offer elsewhere. This is demonstrated by KPMG’s recent survey of 18,520 consumers from more than 20 countries which found that 78% of consumers have claimed they would switch brands for a better rebate discount

 

So, what is the alternative? How do businesses that operate in an industry where rebates are the status quo stand out or even transform their loyalty strategy into something that drives real client acquisition.

 

Personal reward for business spend is not new, in fact American Express, The Royal Mail and others have been successfully implementing reward programmes that benefit the individual for their work or business purchases.

 

The newly launched ‘Prosper Loyalty’ has developed a unique way to reward individual business owners on a pre-paid loyalty Mastercard based on their business spend. Customers can be rewarded with a % discount or specific spend goal via a completely digital platform. In this case a more aspirational reward (which can be used almost anywhere) not encourages increased spend (generating a significant overall sales increase), but also creates that emotional bond that is missing from a business rebate by allowing customers the choice to spend in the way that matters most to them.

 

Prosper Loyalty Team

 

For any queries please contact us at: contact@prosperloyalty.co.uk

 

About Prosper Loyalty

 

We believe that every business, no matter how big or small, can reward their customers in a more meaningful way in order to both drive sales and retain your most important customers… for the long term. We are a fast growing and ambitious loyalty company who have delivered over 100 million reward points with thousands of businesses from small SME’s to larger corporate businesses such as Samsung.