Instant Rebate vs Discount: What's the Difference?
Many factors can make or break a business, including location, leadership, market demand, competition, etc. While you may think all is smooth sailing once your business launches, you still need to drive sales and enhance company loyalty. Popular strategies include offering an instant rebate for specific products or promotional discounts.
These marketing campaigns can help grow your customer base and improve sales. For a successful business, it is essential to know the difference between instant rebates and discounts, which we will explain below.
What is an Instant Rebate?
An instant rebate is when a seller will provide cashback to the customer when a certain condition is met. This serves as an incentive for customers to complete the transaction with the business. It is a type of marketing strategy to encourage future transactions from the customers, increase customer loyalty and improve sales and market share.
Certain conditions need to be met for the instant rebate to apply. For example, volume discounts (how much the cost of a product is changed based on how much is sold from your trading partner), special pricing agreements (SPAs) or claim-backs. That is why earnings or payments from instant rebate deals can form a significant proportion of a company's profit margin.
There is a wide range of industries, including building supplies, electronics, retail and wholesale distribution, that regularly offer instant rebates based on certain locations, products or product groups and on certain types of transactions. However,this means that instant rebates can get rather complex.
The Benefits Of Instant Rebates
Instant rebates come immediately after the sale — for customers that follow through with the transaction. They help businesses increase conversion rates and encourage customers to buy while keeping the market rate firm.
Regardless of the industry your business is in, rebates can encourage more customers to engage with your business. The top three advantages include:
- Save costs on marketing strategies: Digital instant rebate marketing strategies are managed by customised software. They reduce the amount spent on rebate forms, postage fees, and labour expenses when processing large volumes of sealed envelopes.
Digital rebate marketing also relies on paperless customer input, streamlining the rebate process. Your customers will appreciate the fast and straightforward experience, increasing the number of followers for your brand.
Effective digital tools: Rebate marketing is effective. Instant rebates help build brand awareness and increase brand following. When applied in a B2B setting, instant rebates can convince new buyers to give your product a try and encourage current accounts to order more of your products.
Better customer data: Instant rebates are great for gathering customer data. You can observe useful information such as social media behaviour, browsing habits, demographics, etc. The data collected can be used to design targeted ad campaigns and tailor a brand identity that best connects with your customers.
What is a Discount?
Discounts are often applied at the point of purchase to reduce the buying price. When you get a bill, you pay the discounted price. Customers can view the discounted price upon purchase of the product, therefore enjoying immediate satisfaction.
The most common discounts are cash discounts, volume discounts and trade discounts.
- Cash discounts are incentives offered by businesses that lower the price of the product or service the buyer is buying either by a percentage of the total bill or by a fixed amount.
- Volume discounts are offered to encourage individuals or businesses to purchase goods in large quantities.
- Trade discounts are offered by a manufacturer to reduce the price of a product when it sells to a wholesaler. This discount type is often used to promote B2B sales.
Businesses typically implement discounts in their marketing strategy to increase short-term sales, reduce out-of-date stock, and reward valuable customers. Thus creating better customer relationships and ensuring sale targets are met.
The Benefits of Offering Discounts
Offering discounts for your products and services is a quick way to draw in potential customers. They not only bring new business and attention as a marketing tool but also improves your conversion rate.
Here are three reasons why you should implement discounts when running your business:
- Attracts customers: Everyone loves discounts. Thus, you bring in both new and returning customers. Plus, discounts on popular products are an excellent way to get attention. With the use of social media, the news of your deals can spread quickly and to a quick increase in sales as well.
- Boost sales: Discounted products and services will increase traffic to your store. Consequently, your other products or services will become potential purchases as well.
- Improves brand image: By offering targeted discounting (like seasonal or locational discounts), the public will have a better impression of your brand. For example, if a business were to offer discounts to senior citizens, it shows that the company demonstrates compassion and is making an effort to help people.
Both Are Excellent Strategies
It is quite clear that discounts and rebates are two very different forms of cost reductions. Discount is a very common tool for increasing brand reputation and short-term sales. Rebates are a set agreement, only available when specific criteria are met, which can significantly impact the bottom line.
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