In simple terms, a rebate is a long-term discount that incentivises sales and drives growth, instead of a supplier offering a buyer a discount initially, vendors will offer a rebate incentive to their buyer, meaning instead of receiving the discount upfront, they are given the discount at the end of an agreed period, assuming a previously agreed upon target is met. You can find out a little bit more about rebates in our ‘What is a rebate?’ mini guide. In this article, we’ll be giving you a brief and simple rundown of what exactly volume rebate incentives entail.
Volume rebate incentives are a B2B (business to business) exclusive form of incentive that rewards buyers for reaching a predetermined purchasing volume. The rebate is usually a percentage off 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.
One thing to note is that volume rebate incentives are not as commonly used as other B2B incentives such as early payment discounts or free shipping, and this is likely because they can be seen as more complex to administer and track. However, with the right systems in place, like the intelligent rebate management solution we offer at e-bate, volume rebate incentives can be a very powerful way to drive growth for both buyers and suppliers alike.
Some benefits of using volume rebate incentive agreements include:
- Increased sales for the supplier as buyers reach higher volumes
- Encourages healthy competition between buyers, driving down costs
- Boosts efficiency as buyers work to meet their target volume
- Creates a more loyal customer base as buyers are rewarded for their loyalty
- Suppliers can better manage and forecast cash flow with this type of incentive agreement in place.
As you can see, there are many benefits to using volume rebate incentives in B2B transactions. If you’re looking to increase sales and drive growth for your business, then it could be worth offering volume rebate incentives to buyers, or if you’re a buyer, aiming for such an agreement with your vendor.
If you have any questions or would like more information on volume rebate incentives and the solutions we can offer to streamline the rebate process, please don’t hesitate to contact one of our team, we’d love to help.