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Battling the Rebaterus…

Yesterday I was filling out a mail in rebate after a very long time. I used to do a lot of free after rebate stuff, but with lack luster success in getting the mail in rebates without any follow up I pretty much gave up. This time, I already decided to purchase a USB drive before knowing about the rebate. I have purchased that exact item before for the before rebate price, so I decided if I get the rebate I will be happy otherwise, I will just move on. This made me think about the how’s and why’s of mail in rebates in general. I really do make every effort to file the rebate, but still my success rate is not 100%. Imagine all the people who forget about the rebates after buying a product or misplace the receipt or are too busy to mail it in… apparently the mail in rebate market is very profitable for  companies. To motivate you to read the entire post, here are some fun facts about mail in rebates.

  • 60% of shoppers according to Consumer Union never get a rebate because they forget some paperwork or make a mistake [I cannot find this quote in the Consumer Union website, but this seems to be the widely quoted number]
  • This translates into about $2 billion of free money in an year for American companies.
  • Rebates are most common in consumer packaged goods and electronics. The rebate value ranges from a few dollars (consumer packaged goods) to $50 and upwards (electronics), with corresponding redemption rates ranging from 1% to about 50%. So for low value rebates we can assume to only very few people send in the rebate, even for >$50 rebates only 50% redeem it successfully.

Oh and a Dilbert cartoon on mail in rebate –

Dilbert.com

Now, back to the point of the article – we all know that there is a good chance we will never see the money from a mail in rebate, but we still factor this into our decision process. Why? What is the psychology behind mail in rebates? What can we do to not fall for this “legal” scam?

Consumer psychology of mail in rebate

I tried looking for research on consumer psychology of mail in rebates and there are lot of papers for marketers to maximize the potential of the mail in rebate but the consumer perspective is not well studied. I stumbled upon this recent paper from Gourville & Soman, Journal of Product and Brand management 20/2 2011 147-157. The have conducted different studies on consumer responses to rebate offers. Here are some interesting conclusions –

We think of only successful scenarios

Prior to purchasing a rebated product, a consumer envisions only successful redemption scenarios and does not adjust for things that could go wrong in the redemption process.

I find this is absolutely true. When you see a phone that says – you can save $150 and you essentially pay $0… all you have to do is mail in some form… in our mind we are imagining going to a peaceful and organized home in which there are no distractions, stamps and envelopes are organized very efficiently and within a week you are looking at the $150 check credited in your bank account. But in reality

  • A lot of us are not organized enough to have everything in hand when we want.
  • We might want to see if the product works fine and be sure that we won’t be returning it (if you remove the UPC you can’t return the item).
  • By this time, it would have been 30 days and life gets in the way of filling the rebate forms.
  • Now you can no longer find the cash receipt which you are supposed to attach.
  • You set aside an hr and find it, but oh no, you ran out of stamps… who uses stamps these days… you postpone it for one more week, when you can add going to the post office to your to do list.
  • Finally you fill everything out, but by the time, you are cutting it really close to the expected postmark date. You might forget that day and miss it. Lets assume you finally did go to the post office (just to make sure they postmarked in on that day itself) and mailed it in.
  • You will have to remember to follow up after 6-8 weeks, which a lot of us won’t do.
  • Then even if you get the check you have to go to the bank to deposit it. Or worse, if you got a gift card which is becoming more common, you will have to remember to spend the money soon [Note that these rebate cards are not subjected to the same federal gift card laws like regular Visa/Master Card gift cards even though they might have the logo].
  • Now that gift card has become “found” money so you spent it all on more stuff you don’t need.

How much did you pay for the phone again? $150, not $0.

Role of motivation in evaluating rebate offers

Consumers who are motivated to purchase a product (for example, they might already want the product but the pricing was too high for them) reported very high confidence in successful redemption vs. consumers who had low motivation to purchase a product.

How many of us have bought a product “now” just because it was on sale or it had a rebate and made it “affordable”. It is in our nature to justify something we want with even the slightest positive evidence. We are very skilled in ignoring negative evidence if we are dealing with something that will give us pleasure. Marketers know that. Why do you think rebates are much more prevalent for electronics than necessities?

We want instant gratification

This is not part of the study, but from my own anecdotal evidence. This is part mental accounting and part ignoring our barriers. When we see an ad like this

mail in rebate

We immediately think and “file in our mental accounting” the price of the product as $0. We see “free”, “$0” and the product we love. So we have already experienced the pleasure of getting a great deal. Now all we have left is more work to get a piece of paper (check). By the time we are ready to fill out the form, we have already enjoyed getting the $0 phone, life has taken priority and we start seeing the rebate as a mere chore. We forget that we already paid that $150 and until we get the money in the bank it is not ours. This delayed incentive is a gold mine for marketers.

So how can we overcome the mail in rebate barrier?

How to collect your mail in rebate even if you have Rebaterus in your path?

Keep the rebate out of your purchase decisions : If you won’t buy a product without a rebate, you should not buy it with a rebate. Consumer rebates should always be an added incentive, not the reason to buy a product.

Create a mail in rebate system

  • Once you decide to purchase a product, then search for rebates. If one of the brands you are considering has a rebate and another one doesn’t, consider whether you will buy the product without a rebate for that price.
  • Always, always study the rebate very carefully.
  • Download the rebate form as soon as you buy the product. They might take the form off after the offer end date even if there is still time to send in the rebate.
  • If the rebate is not from a reputable company, consider the money gone.
  • Religiously follow the instructions, even if they sound silly.
  • After you fill out the forms, take a photocopy of all the paperwork – rebate form, UPC, I even take a copy of the addressed envelope. Create a separate folder for mail in rebates and file this paperwork until you get the rebate. I scan all the paperwork and keep it as one pdf file in my hard drive, so that I can just take a printout when I want to resend it.
  • Keep a log of all the rebates. I created a spreadsheet for my 2005 Thanksgiving rebates, I am attaching it here, you can download that and use it. Or create your own, at the very least it should have the following information – name of the product, rebate offer end date, date you mailed the rebate in, mailing address, amount of rebate, phone number/website to check the status.

Download the rebate tracking spreadsheet here

  • If you get a denial letter, make another photocopy of all your documents, add a cover letter explaining your claim and resubmit. [If it is a store rebate like Staples easy rebate or Rite Aid single check, you can try going to the store and enlisting their help].
  • Finally, if all else fails, stop dealing with the fulfillment company and start contacting the manufacturer.

Marketers do extensive research to  increase the companies’ profit and make consumers buy stuff. We as consumers, should be equally aware of our own psychology to make decisions that are beneficial to us.

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