The great rebate debate

The great rebate debate

This year has already seen new rebate schemes launched by HP, 3Com and now Microsoft. It hardly needs to be said that gimmicks will never be as important as getting the right price and level of support, but what are the schemes that resellers want to see more of and which ones leave them cold?

ARN’s Brian Corrigan talked to channel players across the country in an attempt to find out. The message to vendors would seem to be a simple one: the only way to generate any real interest in a rebate scheme is to keep it simple and set achievable targets. Complicated or unrealistic programs will usually be ignored by resellers and fail to drive profitability on either side of the equation.

Here is what the channel players had to say.

• Sales manager of Allied Technologies Group, David Croft: “If I am offered a rebate I want it to give me an increased discount. Some vendors offer gimmicks such as holidays, cash rebates or ‘buy so many to get one free’ but that stuff doesn’t turn me or my customers on. I would rather have a lower buying price.”

• Sales manager of Heathertech, Ben Wilson: “Citrix and Acer put a percentage of sales into a marketing development fund and then work with us on direct mail outs or arranging events. I believe Microsoft does that as well and this is the type of rebate scheme that works best for us. HP has a couple of rebate programs for sales people where points make prizes or you receive cash for every sale and these work too because they are an incentive for the sales team. There’s a lot of paperwork involved but it was successful last year. High volume schemes don’t sit very well or product-based ones where you might get a free printer for selling 10 PCs.”

• Managing director of The Office People, Anita Blake: “Acer has a good margin enhancement scheme where they set a target every month or quarter and we receive a percentage back as a credit if we hit it. The beauty is that we don’t have to do any paperwork and it improves profitability. There are a lot of rebate schemes around where you have to jump through hoops before putting a claim in. If the carrot isn’t big enough then we don’t even bother.”

• Sales manager of Tardis Services, Ian Thomas: “IBM has just introduced a new rebate program for resellers but the numbers are ludicrously high so I have just put it in a draw. It doesn’t mean a damn thing. If they [vendor rebates] are going to generate business they’ve got to be realistic. At the moment they are too hard to achieve, too complicated and even when you hit the target it takes too long to get anything back.”

• Managing director of Bits, Roland Paton: “Rebate programs are often aimed at the big guys and end up being discriminative. Cheaper prices are the only way to offer real value but co-operative advertising would be an imaginative incentive. What I don’t want is 27 DVD players lying in the bottom of a cupboard somewhere.”

• Sales manager of Iris Computing, Michael Dillon: “A rebate program is only significant if the product is good but it can be a nice bonus. One gripe I would have is that a lot of them are for products that make it difficult to achieve down here [Tasmania]. A rebate scheme for a high-end printer might say sell five and get one free but that is a waste of time for us because we may only sell one of those in a year. One vendor we work with has a straight cash rebate scheme on all products with no snags or catches. It works out at about three per cent and although there is a fair bit of paperwork it is a nice little bonus at the end of every quarter.”

• Director of Able Systems Development, Stephen Wong: “The most important thing is that the program is straightforward. HP and Intel are good because you buy from a distributor and they keep the records. If you hit the target, you get the rebate.”

• Sales manager of Ether Tech, Bill Toan: “I don’t like rebates at all because they are too time consuming. We do get them but if they [vendors] have got the time to do rebates why don’t they just give us a better price to begin with? Rebates are only for box movers so they mean nothing to us because we won’t be moving the volumes.”

• Managing director of Vectra Corporation, Chris Smerdon: “Vendor rebates were very big five years ago but have slowly reduced since then. The partners we are working with are now redressing the issue and money is freeing up again. They [rebates] used to be complimentary to your bottom line but now they are being used to facilitate more business through co-operative marketing programs. Unless you work with vendors to attract rebates you can let money slip by. We run four customer relationship events a year and ask vendors to cover the costs of hotel rooms, handouts or giveaways.”

• Sales manager of Winner Computers, Ian Jarvie: “I would rather just get the best price straight up than be offered a rebate. That way there is less paperwork and I don’t have to track it, wait for it or make sure that I get it.”

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