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issue: May 2006 APPLIANCE Magazine

Appliance Line
Mail-in Marketing?


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by Tim Somheil, Editor

Mail-in rebates still bring in customers, but are the customers happy about it?

Best Buy, the appliance and electronics retailer with 900 stores, has been taking steps to phase out computer-related mail-in rebates and replace them with instant savings in the store. This is good news to customers and seems likely to entice even more PC shoppers into Best Buy stores. Other retailers and manufacturers should consider following Best Buy’s lead.
“Our customers tell us that they appreciate rebate savings, but hate the paperwork and the wait. We’ve listened,” said Ron Boire, executive vice president and global merchandise manager, Best Buy, in a statement. “Now, we’ve eliminated more than 65 percent of the mail-in rebates we had a year ago—a big step for Best Buy and the retail industry.”
Boire is understating the problem by characterizing mail-in rebates as an inconvenience. The truth is, many PC consumers despise mail-in rebates and, right or wrong, regard them as duplicitous. Consumers believe that a company offering the rebate wants them to forget to mail it in, or will look for reasons to not honor the rebate. High-profile legal action taken last year against another big U.S. retailer gives credence to consumer distrust. The problem is made worse when shoppers don’t feel they have a real choice. They either pay the high cost of a product without a rebate or gamble on a product with a mail-in rebate.
There are mail-in rebates throughout the appliance industry and on other kinds of consumer goods, but PC rebates have been especially prevalent. Retailers often sell multi-piece computer systems that include the computer, the monitor, and add-ons like a printer, software, speakers, a Web-cam, or other peripherals. Multiple mail-in rebates are offered on the different components of the system, and the “after mail-in rebates” purchase price is greatly reduced. Some of the items in the package end up being essentially free—“after mail-in rebates.”
But the mail-in rebates don’t always materialize the way they’re supposed to. Sometimes the buyer mails them in and never hears anything from them again. Many consumers give up too easily and fail to follow-up. If they do follow-up, requests for information on the status of the rebates may go unanswered, or the customer may be informed that the rebate is denied due to a technicality. (There are stories of customers receiving post cards in the mail explaining that the rebate would not be honored because the customer failed to provide a complete mailing address.)
Of course, there are retailers and manufacturers out there with effective, efficient rebate processing systems in-place. There are customers who get their rebates in a timely manner without added effort or annoyance. Not that I know any of these people personally—the friends and family I’ve spoken with on the topic are generally annoyed, or worse, by their mail-in rebate experience. Even if the problem is not universal, it’s widespread from the consumer’s perspective.
My own experience with a PC purchase was, in fact, with Best Buy a couple of years ago. The store went out of its way to print all the forms and receipts I would need to claim my many mail-in rebates. The sales associate even paper-clipped the rebate forms with the correct receipts. Short of licking the envelopes, I don’t know what more Best Buy could have done to make the process easier.
Some rebate checks came. Some did not. Phone calls were made. A new set of documentation was mailed for some items. After many months, some phone calls and frustration, most of the rebates were honored—but not all. I eventually gave up on a $40 software rebate that just wasn’t worth any more of my time.
There are, of course, remedies for customers who feel they’ve been had by a mailed-in rebate that was never mailed back. The U.S. Federal Trade Commission (FTC) has addressed the problem for years, and in 2000 issued the consumer publication Taking the “Bait” Out of Rebates.
The reputation of the mail-in rebate hasn’t improved since 2000. Michael A. Salinger, director of the Bureau of Economics at the FTC, held up mail-in rebates as breeding ground for potentially unfair or deceptive acts or practices, which are in the FTC’s purview. He was speaking in April 2006 at the International Industrial Organization Conference in Boston, Massachusetts, U.S., about the difficulty of clearly identifying such violations. “A company offers a mail-in rebate precisely because it knows that some people will respond to the post-rebate price but fail to get the rebate. Is there a point where the hurdles needed to collect the rebate make the practice deceptive or unfair?” he posed at the Chief Economist Roundtable. “These are not easy issues.”
Of course, he was speaking from the legal standpoint of an FTC director. And an ethical company that offers mail-in rebates, using an efficient system with careful control of the service, may be looking at the issue from that perspective too.
The customer perspective is different and the issues are easy: mail-in rebates are a risk. If efforts have been made to reform mail-in rebates, they have not succeeded; the connotation is still negative. “If the retailer or manufacturer really wants to give me the savings, they’ll just give it to me,” the consumer says. “No paperwork, no waiting, no gamble.”
That’s what Best Buy is doing. Ron Boire says Best Buy customers like the changes. “They have told us they’re happier with their shopping experiences and much more likely to return to our stores
to shop.”
Maybe other products can continue using mail-in rebates as an effective marketing tool. In the PC world, getting rid of mail-in rebates is a no-brainer. Best Buy is turning a negative into a positive. I believe we’ll see other PC retailers and producers follow suit.
If not—if Best Buy remains the only retailer selling computers without mail-in rebates—then I already know where I’ll buy my next PC.

 

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