Rebate management is the systematic process of recording supplier / customer contracts, tracking purchases / sales against supplier / customer contracts, and managing rebate claims in a chronological and timely order. Rebate management is a sheer headache, especially for the manufacturing industry, where the number of suppliers / customers is relatively large.
For small businesses, ineffective rebate management can chunk out the majority of profits, and for large businesses, that can lead to loss of millions of dollars – for every manufacturing business organization, effective rebate management is a necessity. If you don’t think so, let’s walk through a case study to prove this point.
Case Study Topic – Electronics Manufacturing Company
One data presented by the Promotion Marketing Association showed that 75.4% of customers are likely to buy more when they receive a rebate. Keeping this thought in mind, a tier 1 electronics manufacturing company with a prominent client base in Asia and Europe stared giving rebates to their Asian customers. The response had been quite overwhelming, so they decided to put the rebate on the table for their European customers also - that’s when entire hell broke loose.
This rebate initiative has been good, but the company made the mistake of not creating a rebate management plan before implementing it. The electronics manufacturing market is highly crowded; thus, to unlock the full potential of a rebate program – one rebate management software is required to plan ahead strategically.
One research has indicated that 57% of distributors don’t properly utilize their funds because they lack management skills. In our case study, the company has dived into the vast pool of rebate and incentive marketing, but without getting the parachute of automated management solutions. They faced the problem of less or over payments to customers, which hampered their relationships with the customers thus resulting in reduced sales.
Customer Rebate Management Problems
The intimidating amount of manual working hours required to manage rebates has surged the following problems for the company –
Restricted Growth – The manufacturing company was so distressed by the manual rebate management process that they could not focus on their customers, which gradually declined their customer base. They were having trouble in connecting rebate to spend tiers that caused the company to either accrue very less or over accrue their customer rebates. This caused a lot of discrepancy between the rebate payable amount calculated and the customer claimed amount resulting in a lot of time spend in reconciliations thereby causing strained customer relationships.
Complicated Process – One of the main problems with manual rebate management is timely entry and effectiveness evaluation. When the manufacturing company was dealing with rebate entries of Asia only, they had fewer sales invoices to deal with, so things were working fine manually. But, when they added Europe to the rebate process, things turned more complicated and surged numerous management problems such as less rebate payable visibility to the top management, constant queries from auditor for rebate amounts accrued and settled, etc.
Correct Rebate Price – The European and Asian market behaves differently. Thus, to fix the right rebate rate, the sales team needed to select the products and draw analytical solutions to find the perfect rebate rate. The manufacturing company tried to find the correct rebate rate manually – in which they failed miserably. Thus, they were unable to offer lucrative rebate conditions to top customers while giving away good rebate deals to customer with medium to low purchase volume.
Solution – Automated Rebate Management
The electronic manufacturing market is highly competitive and rebates help in gaining a competitive edge. So, pulling out of rebate wasn’t an option for the customer in this case study. Thus, after mulling over different solutions, they adopted an automated customer rebate management solution and gained numerous benefits such as –
Surcharged Growth – With the automated rebate software, the company brought ease of use to rebate management. The visually appealing interface has allowed the sales team to execute tasks quickly and complete the process perfectly. The sales team were able to view the buying pattern of the customer and hence negotiate better rebate conditions with them. When the rebate management process is completed in less than half the time, the company freed up time to focus on customer retention and retaining strategies.
Easy to Integrate - With customer rebate automation, the company was able to integrate the solution with other ERP and accounting systems. This allowed them to access single source data for the entire company and flow between different accounting systems have improved.
Perfect Calculations – When there’s no requirement to export data and calculate accruals in numerous programs, multiple calculation errors can be avoided. After automating the rebate process, the company now just uses a single system to generate reports and analyse data. Thus, they have easily identified the impact of a certain discount or incentive on their financial resources. They have observed a significant return on their rebate policies after the automation. Since the solution is fully integrated with their ERP, the customer is now able to post accurate accruals at the click of a button. This has also ensured better relationships with customers as they are able to now view at runtime the actual sales of the customer against the rebate conditions defined in the rebate contract.
Findings
Rebate is a vital tool in manufacturing companies' hands to attract new customers and encourage existing customers to buy more. However, rebate management, or if we may say, rebate automation is required for effective results.
Cassini's Rebate & Incentive Management is a kinetic cloud-based solution for manufacturing and other industries to sort their rebate process by integrating with SAP. From setting up the rebate qualifications to rebate contracts, users can customize the rebate process as per their requirements with our solution. If you haven’t yet picked the right customer rebate automation software, give us a call now to discuss your current rebate management process and to know how you could streamline it.
Read more details about Cassini’s Rebate and Incentive management solution here
