When it comes to rebate strategies, there are a few tried and tested methods that most businesses will implement, similar B2B rebate strategies are used across most industries. Here are five of the most common strategies businesses tend to utilise and customers see the most benefit from.
Volume-based Rebate Scheme
Volume rebate incentives are a form of incentive that rewards buyers for reaching a predetermined purchasing volume. The rebate is usually a percentage of the total invoice amount and is paid out by the supplier after the buyer has met their target volume. This type of incentive is mutually beneficial for both parties involved as it encourages buyers to reach a higher volume of purchases, which in turn drives more sales for the supplier and allows them to grow their business.
The Tiered Rebate Scheme
With a tiered rebate scheme, vendors might offer buyers different levels of rebates based on how much they spend on qualifying products. This type of rebate is popular amongst businesses as it encourages their buyers to purchase more products from the company. It also incentivises customers to spend more money, which can lead to increased profits for the vendor and the buyer will see the benefit should they reach that tier level in the agreed time period.
The Product-based Rebate Scheme
In a product-based rebate scheme, customers are offered a rebate on specific products that they purchase. This might come in the form of a moneyback guarantee based on the customers’ impression of a product. B2B product-based incentives might be offered when a supplier is selling a new product to incentivise buyers to trial it, so that suppliers can gauge the products quality compared to a similar product the buyer might normally purchase.
The Customised Rebate Scheme
A customised rebate scheme is one in which the terms and conditions of the rebate are negotiated between the buyer and the supplier. This type of scheme is essential for smaller businesses as it allows them to tailor a rebate. If a customer is buying from a supplier in smaller volumes than higher turnover customers, but at a high level considering their own bottom line and revenue, they can benefit and earn similar rewards as businesses who can afford to purchase in much higher volumes.
The Growth Based Rebate Scheme
A rebate scheme designed to incentivise new businesses to buy more products. With newer companies, it’s often difficult for suppliers to offer more generous rebates like some of the others mentioned here due to a business’s, often initially, smaller outlay. In this case, a growth-based rebate scheme is ideal for both buyer and supplier because it reduces the risk of cutting margins for vendors by staggering rebates based on a company’s growth. Meaning that new businesses can expect as good a rebate as a more established company retroactively and the supplier negates the risk of offering discounts to new start-ups.
There are tonnes of different rebate strategies that businesses can use, but these five are some of the most widely used and most effective. By understanding how they work, companies can choose the right rebate scheme for their needs and the scheme that will maximise profit. Whatever rebate strategy you decide to use, we can help you manage it easily with our rebate management solution. Just get in touch with e-bate today and we’ll do all we can to help.