Volume Incentive Rebates, Examples and Tips

There are many different techniques to motivate customer behavior. In this article, we’re going to look at different types of rebates, including volume incentive rebates. We’ll also see how finance automation software like SolveXia can help to streamline customer rebates accounting.

Coming Up

What is a Rebate?

What are Rebate Incentives?

What are the Most Useful Types of Rebates?

What are Examples of Rebate Incentives?

What are the Benefits of Rebate Incentives?

What are Rebate Incentive Best Practices?

How to Optimize Pricing with Rebate Management Software?

The Bottom Line

What is a Rebate?

A rebate provides money back to a customer of a product or service after the sale has taken place. It’s a type of retroactive payment that ultimately lowers the price of the transaction for the buyer. 

Rebates can be offered to customers by businesses or suppliers, as well as on behalf of manufacturers to their distributors. 

What are Rebate Incentives?

Rebate incentives are geared towards directing and incentivizing specific customer behavior. Depending on what a business is trying to accomplish, it can offer suitable rebate incentives. 

For example, there are rebates that are designed to boost the bottom line by focusing on the monetary value of the transaction or those meant to increase customer loyalty and retention. 

Some rebate incentives are structured for suppliers, while others are intended to be direct-to-consumer. Volume incentive rebates are made for B2B (business to business) as they are based on volume of goods, as the name implies.

What are the Most Useful Types of Rebates?

We continue to allude to the different types of rebates, and now it’s time to talk about what they entail specifically. Since we’re focused on volume incentives rebates in this piece, we’ll start there. 

1. Volume Incentive Rebates

As a B2B rebate, volume incentive rebates are granted to buyers who have purchased a predetermined number of goods from the supplier. Typically, the rebate is a percentage off the total invoice amount that gets paid to the buyer once they’ve surpassed their target volume. 

Volume incentive rebates are beneficial to both sides as buyers are incentivized to sell more. At the same time, when a buyer buys more, a seller is growing their business, too. 

Volume incentive rebates are often replaced by other incentives like free shipping because many teams find them hard to track and administer from an accounting standpoint. 

However, with rebate management software like SolveXia, you no longer have to worry about the complexities. Instead, SolveXia can facilitate pricing, contracts, negotiations, and accounting considerations. 

2. Value Incentive Rebate

A value incentive rebate is based on reaching a set value based turnover target in order to receive the rebate. It’s focused on monetary value rather than quantity. 

3. Growth Incentive Rebate

A growth incentive rebate aims to increase a buyer or customer’s spend over time, such that a rebate is offered when the relevant spend has increased by a certain value, percentage, or volume over a set baseline (such as year-over-year). 

What are Examples of Rebate Incentives?

Let’s dive even deeper into the different examples, including specific volume rebate examples. 

1. Volume Incentive Rebate 

Volume incentive rebates are popular because they are effective. They also typically are structured in a tiered manner. 

For example, the rebate amount will be based on the volume or range of volume purchased. So, a buyer may be offered $2 rebate per product for sales volume up to 100 and then $2.50 off when the volume is between 101-500, and $3 off for volume over $500, for example. 

2. Growth Incentive Rebate

A growth incentive rebate is based on percentage growth over the previous year, and it also has the possibility to be tiered according to a larger percentage growth. This means that a greater rebate is provided for greater growth. 

3. Product Mix Incentive

Another type of rebate incentive is called a product mix incentive. If you’re a retailer who wishes their customers or distributors will purchase a wider range of products, then this could be a useful tactic. 

To exemplify, you may sell electronics, including laptops and external hard drives. You can design a rebate that offers money back on a laptop if a customer also purchases a hard drive, or vice versa. 

4. Product Level Free of Charge (FOC) Rebate

Not all rebates are financial. In fact, you can offer free of charge products based on other purchases. Say a customer buys “X” number of product A, then you can offer the same number of product “Y” for free. 

What are the Benefits of Rebate Incentives?

There are plenty of advantages that come along with offering rebate incentives, such as: 

• Increased customer retention
• Increased sales, and in turn, revenue 
• Better client relationships
• Improved supplier relationships 
• Customer loyalty 

For volume incentive rebates particularly, the benefits include:

• Healthy competition between buyers (which can drive costs lower) 
• Increased efficiency when buyers aim to meet target volume 
• Suppliers have better control over forecasting cash flow 
• Increased sales for bother buyers and suppliers 

What are Rebate Incentive Best Practices?

In order to initiate any type of rebate incentive, including volume rebate incentives, there are some tried and true best practices to upkeep. 

Keep in mind the following suggestions:

1. Clearly Define Goals

Plan ahead of time to determine what goals you are looking to accomplish, and then you can choose the best suited rebate incentive program. At this time, it’s also best to outline the parameters, including the promotion length, sales cap, payment schedules, etc. 

2. Less is More

Complicated program rules will confuse both the intended audience, as well as your internal team. It’s advisable to keep the program as simple and direct as possible so everyone can understand what types of transactions qualify. 

3. Update Data Consistently

Everyone who has a stake should be regularly updated with the right information and data for tracking. A rebate management software makes this automatic. 

4. Track and Analyze

Without tracking, there’s no way to know what’s working versus what needs updates. Rebate management software gives access to analytics and increases transparency. 

How to Optimize Pricing with Rebate Management Software?

Rebate management software takes the hassle out of structuring, tracking, and accounting for rebate incentives. 

With a rebate solution like SolveXia, both manufacturers and merchants can effectively manage rebate eligible transactions with utmost precision, accuracy, and timeliness. 

By eliminating disparate spreadsheets, you can seamlessly maintain happy customers and distributor relationships through automation and the added benefit of analysis. This way, your business can increase its revenue opportunities, optimize administrative processes, and boost relationships for long-term success! 

Along with easing the accounting team’s to-do list, rebate management software also grants visibility for the C-suite to better understand how the rebate program is performing at any point in time.

The Bottom Line

Volume incentive rebates are just one way to increase sales and promote customer actions. Along with the additional types of rebate programs, there is infinite possibility when it comes to maximizing your bottom line. 

However, for every rebate program initiated, it has to be measured and maintained, which is where much of the challenge arises. 

Rather than having to manually track rebate eligible purchases, create complicated rebate contracts, and risk damaging your business-customer relationship because of a rebate, you can leverage a solution like SolveXia. 

Along with rebate management, SolveXia can also be used to automate key finance functions, including: reconciliation, expense analytics, regulatory reporting, etc. 

To learn more, request a demo today!