Yesterday, I was trying to put together some documentation for a mail-in rebate and got to thinking about mail-in rebates in terms of why’s and how’s. In my quest to learn more about the mind games behind mail-in rebates, I stumbled on a very interesting paper titled ” The Consumer Psychology of Mail-in Rebates: A Model of Anchoring and Adjustment“. Everyone knows about the basic psychology behind mail-in rebates; from a retailer’s point of view, it can be concisely put as: bait, sell, delay, and hope that the customer messes up. However, the paper goes beyond this basic psychology to explain why consumers behave the way they do when it comes to mail-in rebates. Here are some key excerpts from the paper:
We argue that there is uncertainty associated with performing effort in the future and that consumers use this uncertainty to justify a preferred purchase precision. If consumers are motivated to purchase a rebated product, they overestimate their probability of redeeming the rebate in order to make the purchase more attractive. However, if they are motivated to avoid purchasing that product, they underestimate their probability of redeeming the rebate in order to make the purchase seem unattractive.
In the context of mail-in rebates, we propose that when consumers are strongly motivated to purchase a rebated product, they might choose the product mindlessly without elaborating about the likelihood of rebate redemption, or simply use the rebate as a reason to buy the product.
Though the main theme of the paper is about mail-in rebates, there are some other analogous insights into consumer psychology. Read this and you will know what I am talking about :
…. the main points that we make hold true in any situation in which the rational evaluation of a purchase opportunity requires a consumer to incorporate an estimate of their own future actions. For example, an exercise machine is worth it if the consumer believes s/he will exercise sufficiently, and buying a car might be better than taking cabs if the usage of the car will be sufficiently large….
….If a consumer is motivated to buy the exercise machine or the car, he might tell himself that his usage rates will be high â€“ on the contrary, if they were motivated to avoid these purchases, they might convince themselves that they donâ€™t really have the time to exercise too often, or that they donâ€™t commute a lot.
The paper is an outstanding source of information on this matter, but it talks more about the “pre-purchase” psychology behind mail-in rebates. However, in my opinion, it is the “post-purchase” period that the retailers are banking on for profits. I think they create a lot of requirements (lot of documents/time contraints….stumbling blocks if you prefer) just to increase the probability that you will fail at least one of them. That sort of delivers a one-two punch to the consumer…you first bought the product (because of a mindset that the above-mentioned paper explains)..and then you stumble along the way (throw away a bar code sticker…or your dog eats the receipt or whatever). For retailers, this is good news…first the sales rise, and then there are profits due to unclaimed rebates.
Here is a silly analogy to mail-in rebates that crystallized after some thoughts. Have you seen a track & field hurdles race? Mail-in rebates are like that. You are the runner, the rebate money is your finish line, and the sundry requirements are the hurdles. If you knock even one hurdle off, you will be disqualified. Some make it, but some won’t. If you start loosing often, you will think twice before you participating in the next hurdles race.