Rebates 101: What is Rebate Management?

By: | Category: ERP

The rationale behind them is simple: rebates help drive interest in a manufacturer’s products and, if handled properly, can build brand loyalty.

However, most rebate programs are structured in such a way that can take months for rebates to be processed and checks sent. It’s little wonder that the frustrating lag between submitting a rebate form and getting a check in the mail limits their effectiveness as drivers of brand loyalty.

An efficient rebate platform that can properly track, trace and manage a variety of programs has the potential to drive a revolution in rebate marketing – enabling manufacturers to sell more products and increase brand loyalty.

Types of Rebate Programs

Rebates come in a variety of forms: volume rebates, growth rebates, retention rebates, and mix rebates.

  • Retention Rebates reward continued business, or customer loyalty. Retention rebates can be rebates of any form, volume, mix, growth, but are usually end of year or “cliff” rebates, paid upon realization of a condition.
  • Volume rebates are the simplest rebate and are designed to limit customer gaming and over-promising. Instead of quoting a price driven largely by the customer’s ‘intended’, or ‘promised’ volume, the seller responds with tiered pricing where the invoice price is fixed, but the actual price varies with volume.
  • Growth rebates are volume rebates based on incremental volume vs. total volume.
  • Mix Rebates drive sales of a mix of products to select end-user segments.

Rebate Management: Components of a Best-in-Class Solution

An automated rebate management solution enables you to easily create and roll out effective rebate programs leveraging the following core functionality:

  • Automation to minimize manual processes
  • Integration with existing software platforms
  • The ability to run multiple promotions ¬– Manufacturers and distributors often have different strategic initiatives for different products, different regions, and different members of their channel. Being able to structure multiple promotions is essential for B2B rebate management software.
  • The ability to quickly change award parameters and payout structure.
  • Tools to segment your audience and assign participant types.
  • Verification tools.
  • Channel communication tools.
  • Mobile optimization.
  • Flexible billing options.

To reiterate, rebates can drive sales and, if handled properly, increase brand loyalty. But they increase the complexity of pricing processes, adding administrative costs and complexities.

In a follow-up post, we will show you how Net at Work’s Rebate Management & Tracking software solution based on Sage X3, provides the ability to set up rebate agreements and calculate and report rebates on sales transactions. In addition, it enables you to generate claims that book the financial impact, giving you control and a holistic view of the process.