Is your rebate program well managed?
Part one of our two-part series on effectively managing your rebate system.
For many B2B businesses, well designed and run customer rebate programs are extremely important and considered a major inducement in keeping customers engaged. When run properly, a rebate program is beneficial to both sellers and buyers.
Why? Because rebates encourage loyalty and motivate your customers to make repeat purchases – which in turn increases your profit margins.
Instant discounts create sales but bite into profit margins with no guarantee of repeat purchases. Using rewards after the sale – instead of discounts at the time of purchase – can increase conversion rates, gain higher volume targets and still maintain selling prices.
Running rebate programs can be challenging
Many businesses with rebate programs want to tailor the programs to best suit their mutual goals with their customers. In the process, a business can find itself running a multitude of rebate programs for a wide-ranging customer base. This is especially common when customers vary in size (small, medium and large) and business arrangements (consumer vs wholesale vs franchisee vs licensed stores). Without an effective management system this can create significant effort for a company to operate and ongoing issues to deal with.
Often rebate programs start out using spreadsheets but quickly an organisation will discover that this is neither efficient or scalable. As more agreements are created more spreadsheets are needed, more stakeholders are involved, and the risk of errors increases.
Other companies look to use their ERP systems to manage rebate programs. While these systems can often provide more tools, they typically have limited functionality and a company runs the risk of setting up a system which is only useful in the short term or requires manual adjustments or workarounds – which again involves extra cost and risk.
With the challenges faced in running rebate programs comes risk. Outdated and manual systems, navigating different agreements, inaccurate data recording, lack of transparency, little collaboration between key personnel and no real time data are just a few of those risks.
And the implications are also important: not having an effective rebate management system can result in missed opportunities, and a negative effect on customer relationships and loyalty. On the flip side, a successful rebate management system allows effective oversight of rebate programs and strengthened loyalty.
In hard financial terms, a successful rebate management system has been shown to reduce rebate overpayments by 5%!
Choosing the right system
An excellent rebate management system allows businesses to build strong relationships, improve internal efficiencies and provide an effective loyalty incentive program. Software tools automate and adapt rebate programs within a secure environment. Up-to-date data can be made available not only to internal sales and finance teams but also importantly to buyers. Transparency is critical to maximising the benefits of a successful program – giving customers access to their immediate aggregated program details provides them the motivation to stay on track and earn their rebates.
Customers with well implemented rebate management systems have increased their topline revenue by 2-3%.
Flexibility is the key
Intuitive rebate management software allows you to choose which program you offer to specific customers and which products are part of the rebates program. You can customise standard trade agreements to suit individual customers, create ‘limited time rebate’ schemes, track the performance of special deals and encourage customers to meet their volume targets.
This type of optimisation can also lead to increased margins, including studies that have shown 3% increases in margins attributed solely to rebate optimisation.
Latest developments in Salesforce
This year Salesforce have introduced Salesforce Rebate Management, a new product aimed at distribution networks. Focusing on enabling collaboration, automate program tracking and payments under one umbrella, Salesforce Rebate Management provides a real time rebate program visibility to staff and partners. Giving sales teams a comprehensive view on how a customer is tracking in their rebate program increases the opportunities to develop rewarding partnerships and drive business growth – and embedding it into the most widely adopted CRM platform on the planet will help enable broad adoption!
In our second part we will look at how one major business has successfully implemented Salesforce Rebate Management into its existing system.