Technology vendors, particularly those serving the consumer market, but also some selling hardware and software used by both consumers and businesses, are to be commended. For years, they have diligently maintained what seems to be an ever-growing scheme, known as mail-in rebates, that boosts the economy tremendously.
The global economic value of mail-in rebates is incalculable. First, as the name implies, there is postage. To get a rebate, you mail in a form along with one or more proofs of purchase. The vendor then mails you a check. That's two stamps right there. If there is a problem with your submission, you might be mailed a notice requesting some missing paperwork. All of this postage is great because, with the proliferation of email and online bill presentment and payment, the post office would otherwise suffer horribly. This way, there is someone to continue paying letter carriers to misdirect my mail.
The technology vendors' munificence does not stop at the post office. Since rebate forms are still typically filled in by hand, someone has to process them manually and cut the checks. This provides considerable work for a lot of people who would otherwise be unemployed.
Then, there are the banks. They charge transaction fees for processing those millions of rebate checks. Better still, depending on the type of account and how greedy the bank is, they may collect fees from both the issuers and the depositors of checks unless the accountholders pay hefty monthly fees or maintain large balances in their accounts. If accountholders do maintain those large balances, the bank is free to invest most of the money on its own behalf, paying accountholders only a pittance in interest. Bank shareholders should definitely buy drinks for the technology vendors to thank them for all of the banks' fat dividends.
And a number of ancillary industries share in the wealth, too. For example, forestry and paper companies provide the raw stock for the rebate forms and checks, while printers print them.
Of course, people seeking rebates spend considerable time to fill in the forms, find the receipts that they carelessly threw into one of the many enormous mountains of paper scattered haphazardly throughout their homes or offices (OK, maybe that's just me), cut the UPC codes off the product boxes, write the addresses on the envelopes, stuff everything inside and seal them, affix stamps, take the envelopes to mailboxes, open the rebate envelopes when they arrive, extract the checks, and take them to banks or banking machines. All of this effort consumes time that could have been used to do other productive work. Thus, the rebates pay people to withdraw time from the normal workforce, thereby leaving work for other people.
There are also add-on effects that are not immediately apparent. Because you can only get the rebate if you provide your correct name and address, the vendor can use that information to build its mail list. Again, forestry, paper, and printing companies and the post office profit from all of the resulting junk mail. In addition, disk manufacturers benefit as the mailing list database grows. What's more, the vendors often cleverly embed one or more eye-catching devices right in the paper of their junk mailings, thereby rendering them unrecyclable. While that eliminates work for recyclers, it keeps garbage collectors and dump workers very busy. Furthermore, here in Toronto, we ship our garbage to Michigan, so all of that excess waste provides work for a lot of truckers, not to mention pumping Canadian money into the U.S. economy.
While certainly generous, the vendors aren't doing all that they can to boost the economy. This scheme works for consumers and small businesses, but large businesses typically can't take full advantage of it. If you happen to have access to an electron microscope powerful enough to allow you to read the rebate's fine print, you will often see a sentence to the effect that you can get only one rebate per address. Companies that buy lots of the same type of gear will, therefore, not find it particularly worthwhile to join in the fun.
One thing that annoys me is the way that retailers treat the mail-in rebate. Their advertisements usually show the price after the rebate. That's fine, but it assumes that I'm going to go through the bother of applying for it. Even then, the price isn't really reduced by the full rebate because I have to pay postage to send in the rebate form.
In addition, while retail ads show the price after rebate, if you live in a jurisdiction with sales tax, the bottom line is not as good as if the retailer actually charged you the after-rebate price for the product. For example, I pay a total of 15% federal and provincial sales tax. For something with a normal price of $200 and a rebate of $50, the retailer advertises the price as "$150 after rebate." But I'll pay $230 with tax and then get back $50 for a net amount of $180. If I had been charged $150 in the first place, as suggested by the ad, then the total price with tax would have been $172.50, not $180. What ever happened to truth in advertising?
You may have guessed that I am no fan of mail-in rebates. Note to vendors: Please just reduce the price at the store. That will save me time and postage, and it will save you considerable costs as well. Yes, I know that manufacturers cannot dictate store prices, but there is enough competition at the retail level to ensure that most of a manufacturer's price reduction will show up in the retail price fairly quickly.
The vendors are probably hoping that many people won't bother to apply for the rebate. However, that defeats the purpose. If buyers are not going to take advantage of the mail-in rebate, they would be irrational to consider it in their buying decisions. Then again, I've never been one to expect a whole heck of a lot of rational behavior in the general buying public.
The way to beat this is for absolutely everyone to take advantage of the rebates. I bet that the vendors would stop using mail-in rebates within about three seconds if that ever happened.
Joel Klebanoff is a consultant, a writer, and president of Klebanoff Associates, Inc., a Toronto, Canada-based marketing communications firm. Joel has 25 years experience working in IT, first as a programmer/analyst and then as a marketer. He holds a Bachelor of Science in computer science and an MBA, both from the University of Toronto. Contact Joel at
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