127: Foodservice rebates and coupons… an overused tactic with few results

We get calls nearly every week about the effectiveness of old marketing standbys like operator rebates...  or coupons for this or that.  The short answer we give is, well...

Rebates are a waste of money. 

Especially now when there are more effective, measurable and lower-cost solutions.  But first, here's why rebates typically gather dust on operator desks...

• Rebates might help move a slow-moving product (this is an entirely different subject!). But if the intent of the rebate is to get operators to switch their business, operator promotions have little impact.
• Why? Independent operators don't have the time to deal with the hassle. DSRs often fill out the forms on an customer's behalf... assuming the operator is already buying the product. However, veteran DSRs won't try to swap much business to Brand X because of a coupon if the customer is already loyal to Brand Y. It's in nobody's best interest as long as everybody is happy with the status quo. They may swap if the product is equal in quality, lower in price, gives the DSR better margin and customer believes it won't screw up any recipes (hmmm... that sounds like a distributor brand opportunity!).
• The primary rebate users are schools, hospitals or other larger operations that has a staff to deal with the bureaucracy of rebates. But then one might ask why not just identify those big non-commercial users and offer a reasonable deviated price and save everybody a lot of work!
• Ask any DSR and they're probably aware of dozens of rebates going on during any given week. Rebates are a yawner. White noise. Gnats that are swatted away. DSRs might flip through the piles of possibilities and snag one or two for products that they already sell in volume. Makes a nice present for those existing customers... but it won't do much for incremental sales (let alone sustainable sales).

So, what's the alternative?

Out of fairness, there haven't been too many incentives beyond rebates and coupons.  In fact, some distributors have made it a challenge to initiate more innovative and measurable operator marketing tactics.  So, there's no real harm in rebates or coupons - except for the tremendous expense!

But things are changing so a more integrated approach is possible that reflects the realistic foodservice marketing and sales cycle: 

• Step 1, train DSRs... because DSRs sell what they know. If you help them understand and love your product, DSRs will be an ongoing promotion machine (without all the paper and administration work of rebate forms!). AFDR's online video-based DSRSmart program is one way to train them (heck, you can train broker reps with the same system).
• Next, provide easy and convenient sales support materials. The first tool is the training video mentioned above. Make it downloadable from DSRSmart so the DSR can use it with customers. Mobile applications also are becoming popular because brief selling tips and product images can be accessed at a moment's notice when an operator starts asking questions.
• Step 3: Sample qualification. The operator has seen the "raw" product via the video, and the DSR has answered questions using some quick selling points. The DSR can now quickly determine if the operator is a good candidate for a sample. If so, the sample is a great investment. If not, then you just saved the sample expense... let alone saved the DSR from trying to convince the operator to take a product in good faith in exchange for a rebate.
• There you go... you start moving the product with better assurances of a sustainable and full-margin sale. No rebate needed. And each of the steps above can be measured without printing a piece of paper... or dealing with the bureaucratic nightmare of reviewing invoices and forms to determine whether the operator qualifies for the rebate.
• But, if you STILL want to sweeten the pot, you can tie in an operator incentive with realistic measurement and follow-up. We'll save that hint for another DSR Insights.

In the meantime, listen in as DSR Live! co-hosts DSR Dave Miesse and Bill Hornung are joined by Mike Grayeb, DSR Live! Senior Producer (and a veteran food marketer himself) as they yak about rebates and coupons.