A Guide To Marketing By Giving Away Someone Else's Money

Have you ever used a coupon at a grocery store or submitted a rebate for a product? If so, you've been part of what is one of the more brilliantly conceived direct promotion methods in the marketing world. Coupons (and rebates, another form of couponing) are a big deal. The obvious reason they matter is because people love to get discounts. But coupons (and rebates in particular) are an inspired idea for promotion for the simple reason that the person who is selling the product is usually not the one who has the pay for the cost of the discount. In other words, coupons and rebates let sellers promote products by giving away someone else's money. This isn't without some danger though …

As Dilbert demonstrates, in reality we all know that most companies that offer rebates don't make it quite that easy. Who doesn't have a horror story to tell of having to cut off the side of a box, fill out a form in triplicate and wait six months to get a check for $3 that expires a week after you get it? Rebates are a pain, usually because the more hassle they are, the lower the redemption rates on them (BusinessWeek estimates that up to 40% may go unredeemed).

Sounds great for marketers, but the problem is that as more consumers start to realize that they didn't get their money, coupons and rebates will stop working as an effective promotional tool. In an ideal world, though, they can help consumers save money AND marketers sell more effectively. Thankfully, some retailers are creating models to help fulfill the promise of couponing and rebates – even in a low trust world.

Safeway, a grocery store chain in the US, recently implemented a program for their frequent shoppers that allows them to enter coupons into their account directly online, and then redeem them in a store without having the actual coupon. Along similar lines, BestBuy and other large electronics retailers have had a system for years that makes claiming rebates easy by pre-printing forms for customers with clear instructions and often even processing mail-in rebates instantly as they are currently doing for the Palm Pre. The reasons these companies are making coupon and rebate redemption easy is simple:

1. Retailers will get their reimbursement from the manufacturer faster and lower their significant processing costs by digitizing.
2. They can increase their customer satisfaction with easy rebates and coupons, thus ensuring these types of promotions continue to work.
3. Most importantly, increasing redemption rates helps the seller, because they are not the ones footing the bill for the refund offered to the customer.

So what can your business learn from the examples of BestBuy and Safeway? When it comes to marketing and promoting your products or services, how can you find ways to sell that don't require you to fund it yourself?  Talk to your vendors, see how they promote their products and what they are willing to offer you to pass along to your customers. Sometimes the best marketing you can do is to save your customers some money without paying for it out of your own pocket.