The RRC Editor’s Blog

As the publisher of this website, I am very well aware of the many pitfalls of main-in rebates. But, let me play the “devil’s advocate” today and pose some thoughts on the up-side of mail-in rebates. These won’t be new ideas. I’ve come across this line of thinking on various message boards and blogs. This is just my concise summary.

The companies offering rebates expect only a fraction of consumers to complete the rebate submission process and get their money. Let’s say that’s 40 percent. Now, if they sell a computer with a $100 rebate, they can make a $900 computer feel like an $800 computer, because the consumer says “Hey, I’ll just get that rebate money and it’ll only cost me $800.”

Of course, 60 percent of the people who buy the computer will never get through the whole rebate process to collect their money. So, of course, the company takes in more than $800 per computer, on average. In our simplified example, they’d get $860 per computer sold. So, they’re able to sell computers to the frugal people who will only pay $800, while still keeping profits at a level that an $860 computer would produce.

Now, the losers in this scenario are the people who forget to fill out the rebate forms, those who fill them out but don’t get around to mailing them, those who mail them but find out they made some trivial mistake on the forms, those who do everything right and are told they didn’t, those who get their money only after waiting six months, and those who never get their money at all.

The winners are the people who got their rebates in a reasonable amount of time and have an $860 computer, which was technically a $900 computer, for the price of $800.

So, is it good for the whole community to have lower prices for 40% of the people at the expense of the other 60%? I suppose it depends on how much of the non-rebating you blame on the company and how much on the consumer. If you think the consumer was just lazy or irresponsible or just didn’t want the money all that much, then the mail-in rebates are great. On the other hand, if you think the whole process is based on a deception, then you’re probably saying mail-in rebates should be eliminated.

If companies make the rebate process easier, then maybe 80 or 90 percent of buyers will get their rebates. As that number goes up, logical people have to ask themselves, what’s the point of the rebate? Why not just lower the asking price? Well, as we saw in our example, the asking price will never be as low as the after-rebate price, because of the built in assumption that many rebates are not fulfilled. The price might come down to $890 or $880 for our fictional computer. But, without rebates, it likely won’t hit $800 (until the value of the computer goes down, of course).

That’s the story of the numbers. What about the human aspect? Is there some value to having a system that treats people with respect and “feels” sane and reasonable? The corporate bean counter might say “Yes, but how much is that worth in dollars?” Do we really need to figure that out? Or, are we just so tired of the hassle of mail-in rebates that we don’t care. Maybe that computer will cost everyone a little more cash and we’ll all get more time to live our lives and a bit less stress in the bargain. Do we have a deal?

The people over at Staples must be doing something right. They have the best record of anyone listed on Rebate Report Card. As of this writing, they have 12 reports and a grade of “B” (81% to be precise). That’s pretty good for this grading system.

You have to remember that people are a lot more likely to come to our website when they have a complaint, as opposed to a compliment. So, when you see that 12 people took the time to report their experience with Staples and the average grade comes out to a “B,” you have to assume things are going pretty smoothly, on the whole, in the Staples rebate system.

Staples has something they call “easy rebates” and they appear to still have traditional mail-in rebates (some of which don’t qualify for the “easy rebates” program). I don’t know if it’s only the “easy rebates” that are getting good grades here. But, even if it is, that’s still pretty good, compared to most retailers.

You also have to remember that most rebates are not offered by the retailer. They’re offered by the manufacturer. Maybe Staples (and other companies) gets some credit they’re not really due, and likewise for the complaints. But, it should all average out in the end.

So, take a look at the stats and decide for yourself. Maybe the numbers have changed since the time I wrote this.

View Stats Page

The verdict is in, on the question of how long one should be expected to wait for rebates.

According to Rebate Report Card visitors, 8 weeks is as long as we should have to wait. Anything beyond that is a bit unreasonable. And, nobody thinks 12 weeks or more is a good idea.

Just check out the “News and Polls” page to see the details and cast your own vote.

Most companies are working against their best interests when make rebate instructions difficult to follow and keep rebate deadlines as short as possible. They think they are maximizing profit by reducing the chance that the consumer will succeed in claiming the rebate. Not so, according to rigorous, scientific, marketing research.

They are going to be shocked if they ever find out about research from the University of Florida that shows consumers are actually more likely to turn in rebate claims when subjected to shorter deadlines. And, those companies’ executives might have strokes if they read further and learn that we turn in those rebate claims faster, and in greater numbers, when subjected to more difficult instructions.

Now, you might be thinking “If the science is right, then I don’t know if I want companies to change their ways. Maybe things will only get worse for us consumers.” But, would things get worse, if companies did what this research implies they should? Answer: yes and no. Let’s consider what would happen if companies used longer deadlines and simpler instructions for their mail-in rebates.

As a group, consumers would be less likely to turn in those rebate claims, according to the research. But, those few individuals who fought against instinct and behaved rationally, would benefit from easier instructions and looser deadlines. And, they’d have the University of Florida and Rebate Report Card to thank, for getting this information out.

Anyway, there’s not much reason to worry about companies changing their ways anytime soon. This research was done in 2003. If the company executives haven’t read it by now. I really don’t think they care.

The research cited above was conducted in 2003, by former UF marketing instructor Timothy Silk. You can read a summary of his research project at:
http://news.ufl.edu/2004/06/15/rebates/

You can read the abstract and full text of the project results at:
http://edumacation.com/RebateDissertationTimothySilk