Managing customer rebates? Here’s the potential ROI

Managing customer rebates? Here’s the potential ROI

There's no way around it: Businesses managing customer rebates often need the most modern rebate management software to manage them effectively and boost financial performance. Yet software can be costly so many organizations are extremely cautious when it comes to investing in new software especially since they must convince their senior stakeholders and decision makers too.

Before evaluating your rebate management options, you need to understand how a new software implementation will potentially benefit your organization and what outcomes are generated from actually using the software to its’ full potential. Obviously, we not only want the software to improve our current processes, but it must make financial sense as well. But how do you determine the return on investment (ROI)?

One of the best ways to determine whether software is going to fit into your budget and meet your needs is to perform a comprehensive return on investment (ROI) analysis. A properly done ROI analysis builds a business case for the project so the organization is in a better position to make a decision, set goals and deadlines.

How does Enable calculate and measure ROI for customer rebates?

Enable has helped dozens of companies within the building materials, automotive, electrical, and grocery and food industries enhance their customer rebate programs with our rebate cloud that benefits purchasing, finance, and sales teams, so we know a thing or two about helping calculate ROI across various industries.  

At Enable we help companies calculate the potential ROI by identifying their current time spent on rebate admin and gathering initial inputs such as rebate income, annual rebate deals, and average delay in paying out rebate. The Enable team then calculates an ROI by taking this initial information and translating it into time and money saved with the Enable platform. Through this process we consider improvements in minimizing overpayments, optimizing available incentives, and going wider and deeper with incentives.

To determine the ROI that a company can achieve with the Enable platform, we’ve extracted the results from our ROI calculator for those who are paying out rebate (customer rebate use case) and analyzed the various inputs to uncover patterns and averages to achieve a more streamlined expectation when discussing ROI with prospective and current customers.

Our ROI findings for customer rebates:

We’ve spent a substantial amount of time focusing on collecting rebates, but we also spent time analyzing the payment side as well – customer rebates. Similar to supplier rebates, we’ve considered overall analysis across industries, but we’ve also done analysis based on specific industries.  

Overall, manufacturers saw the potential for 18.75% of rebated sales to be impacted and optimized with increased visibility and encouraging targeted purchasing leading to a 1.45% uplift in sales and a .55% uplift in margin. For example, if we consider that our rebate-able sales are $400,000,000 and our current incremental net margin is 5%, this will lead to another $1,087,500 in sales and an increased profit of $54,375! Our new overall incremental net margin would be 5.0275% which would lead to an additional profit increase of $20,625. This is just from driving targeted purchasing and therefore enhancing your business relationship with your customers.  

Partners paying rebates also saw the ability to incentive 10.73% of non-rebated sales leading to an uplift in sales of 1.36% and a 1.16% uplift in overall margin, on average. Using the reporting suite in Enable, exposing their true net-net margin, prospects believed they could see a .3% uplift in overall sales, on average. While all of these averages indicate boosts in a company’s financial performance, previous ROIs show a potential for saving 35% of their time associated with month end processes.  

Just some of our customers who have seen significant ROI:

Without Enable, Stemco would not have discovered several duplicate items submitted over the past year. The system helped them locate $35k in overpayments which had previously been buried in over 5,000 lines of information.

Stuart Turner have saved time and cut back on the number of staff needed. They tell us that accruals are done straight away, and reports are available on the fly. Previously, it would take them at least two to three days to do accruals and reports using 3 people they now use 2 from finance and sales. In total, it now takes them less than 75% of the time it used to take them to manage rebate agreements, accruals, and reporting.  

”Employees once responsible for sifting through spreadsheets are now helping analyze which rebates programs work best and how to optimize these programs for mutual growth”.  

Bob Gay, Manager of Customer Profitability and Rebates, Advance Auto Parts.

ROI trends based on industry

Building Materials Industry ROI

When conducting an ROI analysis we break down our time savings into 6 “buckets” of rebate processes, which include reduction in time spent on:  

-month end processes
-deal creation
-sharing and consuming rebate data
-deal approval  
-resolving rebate disputes  
-forecasting and accruals 

The building materials industry saw a higher average than the overall customer average in five out of six of these buckets: month end processes, deal creation, sharing and consuming rebate data, deal approval, and forecasting and accruals. This suggests that those in the building materials predicted they’d benefit heavily in time savings as compared to other industries through automation and data-driven insights. This industry also saw the potential to reduce month end processes by nearly 40% and forecasting and accruing by nearly 35%.  

Grocery/Food Industry ROI

The grocery and food industry saw the opportunity to “go deeper” and create more complex, targeted deals with 12.5% of rebated sales that leads to an average 3.5% uplift in margin. They also saw on average, the ability to reduce month end processes, dispute resolution, and forecasting by 33%.  

“We wanted a solution that didn't just tell our members what rebate they're earned, but gave them an incentive to grow and maximize their rebates across all suppliers”.

Tom Gittings, Managing Director, Confex

Electrical Industry ROI

The electrical industry sees the potential for 2.5x sales uplift due to customer loyalty as compared to the overall customer rebate cohort (.5% vs. .19% respectively) using Enable to strengthen those relationships. Similarly, they saw potential for 35% of incentivized sales to be impacted with targeted purchasing leading to a 1% uplift in sales and a .75% uplift in margin. Again, the electrical industry identified the strengths in building relationships and loyalty using the Enable platform based on the visibility manufacturers have into their customers spending habits and where they sit with their tiered deals, enabling them to encourage their customers to spend strategically.  

What could your customer rebates ROI look like?

From our industry analysis those managing customer rebates saw more potential ROI for time saved in month end processes, creating and approving deals, and sharing and consuming rebate data.  

Overall Enable’s rebate cloud can enhance your business processes, revenue, and business relationships. It will save you time on the front end, but it also helps you avoid unnecessary true ups and trading partner disputes as there’s less admin and manual work required. The system does the calculations for you which allows you to focus on using customer rebates as a strategic driver of growth.

If you would like us to conduct an ROI calculator analysis that is specific to your organization, please reach out at hello@enable.com. Enable can and will identify room for improvement and deliver ROI within the first year.

Emily Breitbach
Rebates & B2B deals

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