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When rebates go from bad to worse

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Product rebates are one of those things in our society that receive mixed reviews. On one side, you have the marketer who can use rebates as a tool to entice customers and potential customers to buy their product. On the other side is the consumer who must walk carefully through the rebate requirements to claim their prize.

Rebates provide marketers with several distinct advantages:

  • Creates a discount for the product so that it can be advertised at a lower price
  • Draws interest from price sensitive shoppers
  • Provides a competitive distinguisher from the same product sold at another retailer
  • Requires the customer to go through an additional process to receive the discount. So many rebate purchases may not pay-out. Thus leaving the purchase at full retail contribution margin.
  • Provides the marketer with a valuable customer list that they can use for targeted advertisements in the future

Consumers can benefit greatly from the discounts if they are willing to follow-up and submit all the required documentation. Then after 4-8 weeks, if they’re lucky they’ll receive the check in their mailbox and reap the rewards of their efforts.

But rebates have long been an annoyance to consumers as well. It’s not uncommon to find the rebate road filled with land mines that can crater the trip. Consumers are usually required to provide a receipt, an exact form (no photo copies), and a UPC bar from the product box. The rebates are time dated as well. If any of the elements don’t match-up or if the consumer forgets to dot and ‘ i ‘ on the application then its rejected. But wait there’s more. The rebate checks are often mailed in a very non-check looking postcard. Those are easy to assume as junk mail or easy to lose in another set of mail such as a magazine. The Internet is filled with consumer complaints about rebate scams and hard to follow processes.

In the past week, CPG Marketing Inc. and Continental Promotion Group have filed for Chapter 11 bankruptcy. These two entities list the same corporate address and chief executive. What service do they provide? One those services is rebate processing for big names like Costco, Home Depot, and Bed Bath & Beyond. This is really not good news for consumers. What happens to all those rebate checks that are in the mail or being held for processing? Bye-Bye rebate. It gets worse. Try to deposit that check and you could be dealing with bank fees for a bounced check.

Customer focused companies will need to be quick to act and provide consumers with an alternate path to cash their rebates. A quick peak at the Costco site shows that they have already made some adjustments:

I found this page from the Costco site in the Google cached pages:

costco1

It’s been replaced with this.

costco2

Bottom line: Be careful out there and check your rebates. If you have one from CPG, contact your retailer before cashing it.

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