Monday, May 27, 2013

Mail-Order Rebates: There'll Never Be an App For That

Filling out a mail-order rebate is a concrete test of skill. Think about it: in the digital age, everything that companies do (job applications, car registrations, college registrations, college classes, classified ads, telephone listings, funeral arrangements, pizza delivery, bill payment, package tracking, ink cartridge refills, ticket reservations, and photo printing, to name a few) is online except mail-order rebates. Why is this, you ask?

First, consider the reasons that companies offer online services to consumers. They know that online services are easier, as people can avoid the bothers of talking with salesclerks, finding directions, and putting on pants. Those who aren't shy about technology are more likely to choose online services over real-world ones because of convenience, and some will even avoid doing things that can’t be done online because they're so used to the convenience. This is because most people will always take the easiest way out of a given situation so they can extend less effort, save time, and encounter fewer problems. Thus, companies will always have incentive to make their processes easier so they can sell more products and make more money.

Mail-order rebates are the exact opposite. Companies advertise rebates that sound appealing (“Just $49.99 after mail-in rebate!”), and since everybody loves getting money, customers feel like they’re getting a deal and now have incentive to buy the product. After the customer makes the purchase, however, the company is no longer trying to draw in that customer, and no longer has an incentive to make the process easy.  Actually, the company now has incentive to make the process as difficult as possible so they can avoid giving out rebate money.

Consider three examples: an instant rebate, an online rebate, and a typical mail-order rebate, along with the steps required to complete each. Which one sounds more appealing to a company?

Example 1: Instant Rebate
Customers must:
1. Buy product
2. Do nothing – cash register is set to automatically deduct rebate
Customer Effort Required to Receive Gratification: None
Percentage of Customers Finishing All Steps: 100%

Example 2: Simple Online Rebate With Direct Deposit
Customers must:
1. Buy product
2. Keep receipt from purchase
3. Go to website (listed on receipt)
4. Fill in form
5. Enter code from receipt
6. Check off box saying Terms and Conditions have been read
7. Wait for company to send rebate
8. Receive notice of rebate automatically deposited into bank account
Customer Effort Required to Receive Gratification: Marginal
Percentage of Customers Finishing All Steps: Almost All

Example 3: Typical Mail-In Rebate
Customers must:
1. Buy product
2. Keep receipt from purchase
3. Keep form received at purchase
4. Keep box item originally came in
5. Locate pen (that works)
6. Locate flat surface (to write on)
7. Copy information from receipt on to form
8. Locate scissors
9. Cut UPC label off box
10. Locate envelope
11. Put forms and UPC in envelope
12. Copy address on to envelope (Important: Must be done before Step 13)
13. Lick and seal envelope (bitter taste left in mouth)
14. Put stamp on envelope (may require buying stamp from post office)
15. Locate mailbox
16. Insert envelope (may require opening mailbox door)
17. Wait for company to receive rebate envelope
NOTE: Steps 1-17 must be completed by the Offer End Date listed in small print on the order form. 
18. Wait for company to process rebate form
19. Wait for company to send rebate check
20. Open probable junk mail in hope that it might be rebate check
21. Open rebate envelope (letter opener optional)
22. Put check somewhere safe
23. Put on pants
24. Drive to bank
25. Park car
26. Go inside bank
27. Fill out deposit form
28. Look up bank account number (for deposit form)
29. Wait in line
30. Give deposit form and check to bank clerk while answering routine questions about whether there’s anything else you need (there isn't)
31. Take receipt from clerk
32. Optional: Write deposit amount in checkbook
Effort Required to Receive Gratification: Way More than Online
Percentage of Customers Finishing All Steps: Way Lower than Online

Companies know that people will consider the steps, the resources involved (pen, envelope, stamp), the trip to the bank, the trip to the mailbox*, and procrastinate filling out the forms until after the expiration date because it’s always easier to put off doing something difficult than it is to put off doing something easy. Or, they’ll falter somewhere between Steps 2 and 12 (and, occasionally, between Steps 20 and 23). Still others will just plain forget. Even those who complete the process might not get their checks if they’ve neglected to correctly read the instructions (often explained in tiny print or with big words).

* Recently, the phrase “Save a trip to the mailbox” has entered the vernacular as a way for companies to make paperless bill payment more attractive. The trick lies in their using the word “trip” to turn routine mail drop-off into an arduous journey comparable to Hannibal crossing the Alps or Frodo bringing the ring back to Mordor.

Companies know these things, and they’re not going to change. They’ll never be an app for mail-in rebates; for the foreseeable future, the prizes will go to those who follow instructions, have access to envelopes and stamps, check their mail carefully, and manage their time well. The smartest consumers will win out, and those who thrive on instant gratification will pay more and be left behind.

I write about this topic because it provokes a bigger question: is the lesson taught by mail-order rebates an anomaly in a changing world of new technology and ways of doing business, or is it proof that the time-honored skills of accuracy, planning, and being prepared will inevitably yield success?

I wish I had the answer.

For Further Reading: writer warning consumers about tricks companies play in offering rebates
US News & World Report article encouraging consumers to smarten up