Many businesses consider rebates an afterthought at worst or at best, a mere bonus between B2B trading partners. And with that outlook, plenty of profit can be left on the table. Many organizations are now seeing rebates beginning to emerge as one of their newest strategic sources of revenue. Rebates are increasingly being seen as excellent tools to incentivize buyers while reducing costs and a strategic method to align pricing and performance and ensure that your forecasts and negotiations are as accurate as possible. But you will need a tool to manage your rebates – the time may have arrived to ask yourself the same question that we will answer in this article; ‘How Rebate Management Software Works?’
At Pricefx, we have spent more than a decade in the business of providing rebate management software to enterprise-level businesses like yours as a part of a total pricing solution. So, with that expertise in rebate management and its role in pricing in general, we look forward to providing you with a rundown of how innovative technology works to help you become more efficient and profitable in your pricing.
Let’s dive straight in and first analyze exactly what rebate management software does before we move on to discussing how it works and the considerable benefits possible for most types of business when using it.
What Rebate Management Software Does
In simple terms, rebate management software assists in the process of recording rebate agreements, tracking purchases and sales against those agreements, and managing accruals and rebate claims in a timely manner.
Many people may simply see your rebates as one of the ways you are using to incentivize your customers to purchase your products. For example, ‘buy 10 000 units of my product and I will give you 5% of the total purchase back’ and so on.
But looking at rebates in that way is oversimplifying their role and underestimating their associated power in setting your prices for maximum positive result for your company.
Quality rebate management is about strategically reducing your price dilution upfront and incentivizing buying behavior after the fact to improve your price realization and plug your margin gaps.
It means you do not have to discount to make the sale, and the rebates will be returned only after your unique conditions that meet certain business goals or criteria (for example: driving an inventory reduction initiative) have been met.
To sum it up, quality rebate management software allows your business to drive or incentivize or in a certain define customer behavior, in a better way than do promotions, discounts, and even sometimes customer contracts. By setting up a series of conditions that will entitle your customers to receive a benefit from you, it is a powerful and strategic selling tool.
With a dedicated rebate management software system, you can be empowered with the ability to forecast benefits, model proposals, determine net margins and influence trade activity to maximize returns.
Often, businesses dedicate whole teams to using outdated legacy systems like Excel spreadsheets to follow broken processes, reducing output, and opposing the anticipated benefit of the rebate agreements which commercial teams have spent untold resources negotiating.
Therefore, it is essential for any company who is involved in rebates to regularly evaluate their existing rebate management process and identify areas for improvement.
That usually starts and ends with the adoption of rebate management software.
Learn More Here About How Bosch Thermotechnik Increased Rebate Efficiency with Pricefx
The 4 Major Ways that Rebate Management Works to Help Your Business
With a quality rebate management software system, large-scale businesses just like yours can empower the flexibility of the technology and realize rebate processing times that match their expectations.
After all, providing rebates accurately and in a timely manner is critical to any business looking to stay engaged with their customers and not erode their trust.
So, let’s jump into the top 4 ways that rebate management software works to help you do that;
1. Automating & Streamlining the Rebate Management Process
By automating and streamlining the rebate management process with task-specific software, through increased efficiency you will create significant capacity to price smarter and more strategically, we’ll review some ways this extra capacity will be beneficial to your organization in the next point.
With the technologically created extra capacity, you should now have the time and resources to perform tasks that are more profitable for your organization and improve your margins.
Streamlining rebates will allow your company to simplify the sales and undertake the rebates setup much more efficiently as an automated process rather than a manual one. And that will take place through every step of the rebate management process transforming your work and the strategic outputs of your pricing team.
2. Learn from Historical Data & Simulate Future Moves Too
Now that we have learnt that automating and streamlining the rebate management process with dedicated software will build your organization’s strategic pricing capacity. Your company will have the ability to use the software to provide powerful pricing insights and in turn, to understand the potential impact of your rebates on the organization’s profitability before you even execute the action.
When rebate management software is part of a holistic pricing software system encompassing price optimization and management, pricing analytics, sales compensation, and managing your agreements and promotions the capacity to make big wins in your pricing strategy is significant.
Regardless of what your organization’s business goals are, rebate management software combined as part of a larger pricing software system will help you realize the impacts that your company is trying to make.
Learning Pricing Lessons from Historical Data
Rebate Management Software can look at your past selection of customer products and conditions and based on those conditions and the criteria that you have set up, analyze the benefits of the past to project if they are promising idea to continue with into the future.
In combination with your complete pricing software tool, you can check your sales figures over the past year and if your price elasticity will have a positive impact on your desired business objectives after invoicing.
If you have been looking to increase volume by 5% in the past year while increasing the margin from 25% to 30% but you only have made an increase of 1% rather than 5%, you clearly will have to rethink your existing rebates scheme.
Using Simulations in Your Rebates Program
Similarly, when used in combination with a complementary total pricing software solution, rebate management software can help you simulate the future outcomes of your rebate program and forecast your margins into the future too (accounting for seasonality and specialist industry knowledge).
You can run multiple price simulations to track the effects of price and rebate rate adjustments.
By running these simulations, you can adjust the prices of your products and/or the rebate percentages that you offer to your customers in the future, and then when it comes time to implement the new deal, apply the price simulation that is most likely to help you close the sale consistent with your business objectives.
It will even allow you to track your progress as you work towards your business goals. For example, a month into your fiscal year, with your rebate management software you can check how you are stacking up against your projected figures for months 2, 3, 4 etc. If you are surpassing your projections, you may want to contact your customer and offer them a sweetener of a further 1 or 2 per cent in their rebate deal for a limited time to foster good customer rapport.
After all, a happy customer is more likely to come back to you to buy again.
3. Increase Deal Value
Once the complexity behind manually entering, tracking, and calculating incentive rebate agreements is removed with dedicated rebate management software, you and your customers can focus on utilizing incentive rebate agreements to benefit each other.
An automated system provides you with clarity on any opportunities you may be close to realizing so that you can understand whether you should increase orders with certain customers or not.
Empowering your sales organization with the visibility of the performance of rebate programs with key customers will allow them to drive those customers to additional purchases that will entitle them to better returns, this will motivate both your customers and your salespeople to drive better value for both.
Furthermore, having the visibility to offer rebates for new products, support marketing of certain products at specific points throughout the year and reward the performance of your best or most loyal customers should increase volumes (and your profits too, if you are combining your rebates software with an optimization tool) and help to forge better business partner relationships and become a known player within your industry sector marketplace.
4. Transform Your Claims & Accruals Procedures
So, if you are offering your B2B customers rebates on say, purchasing more than 5000 units of your products, eventually your customer is going to come knocking and say ‘Hey, I purchased my 5000 products and met the criteria of the rebate agreement – where’s my rebate payment?’
Managing the claims and accruals to pay your clients their rebate money owed on time/every time is another critical (and arguably most important) feature of rebate management software.
With rebate management software you can track in real-time visibility over how many sales have been accrued, program eligibility, validity, exceptions, etc. Track the performance and effectiveness of any rebate and receive and process rebate claims in a way that is transparent and as error-free as possible.
Quality rebate management software does everything a pricing manager needs with systematic, timely, accurate program claims validation plus the ability to forecast accruals on orders or invoices and calculate payouts.
That’s Great – But Which Rebate Management Software is Right for Me?
Now you know how rebate management software works and the time savings, margin boosts and efficiencies it can create for your business.
You may already have an idea if innovative rebate management software like that offered by the award-winning Pricefx solution or similar is something that can help your organization achieve its business objectives, and you may be wondering which one is right for you.
To dive a little deeper into the best rebate management software variants available in the marketplace today, check out the handy article below:
On other hand, if you are already sure that Pricefx is what you are looking for in a combined total rebate/pricing software management solution package, contact one of our team members now:
Jose Paez is a Solution Strategist at Pricefx with 14 years of experience as a pricing practitioner. In his career, he has led in every aspect of pricing from analysis and optimization to pricing strategy definition and execution. His experience in driving and implementing initiatives in digital transformation has given him insight into the typical roadblocks organizations face and the best paths to release the untapped potential of pricing organizations.