Business & Finance
Co-ops Cautioned on Rebate Policies
Who wouldn’t like getting a rebate on big ticket items such as heat pumps and refrigerators? What people won’t like is the electric cooperative running out of rebate money.
Shoppers eye refrigerators during a 2010 California rebate program. (Photo By: ZUMA Press/Newscom)
That’s where NRECA’s Cooperative Research Network can help. While they won’t be writing any checks, CRN and its strategic partner E Source have some do’s and don’ts for co-ops considering rebate programs.
“Rebates can get oversubscribed,” cautioned Brian Sloboda, CRN senior program manager. “You come up with a great program, and you set up a marketing plan to do it for an entire year. And you launch the program and what sometimes happens is you spend all of your rebate money in the first few weeks, and you have nothing left for the rest of the year.”
That, Sloboda said, “means a couple of things went wrong.”
“You probably had a rebate that was a little too generous. It also means you’re going to waste a lot of marketing dollars” on the campaign. But it gets even worse.
“You also are in the very, very bad position of having to tell people that come to you looking for a rebate that you’re out of money,” Sloboda said. “They’re member-owners.”
A co-op in that predicament has a decision to make: dip into next year’s budget to pay rebates today, or, as Sloboda put it, “turn them away and hope they’re not too mad.”
“But they are going to be mad, and rightfully so,” he added. “Those folks tend to lose faith in you and would probably not be very willing to participate in a program in the future.”
When setting up a rebate program, CRN urges co-ops to understand the market potential, and get a good estimate on the number of likely participants. Then state up front how much money is available.
“And it never hurts to low-ball the rebates at first. If you’re planning to offer a $100 rebate, start out with a $50 rebate,” and increase it later if possible, Sloboda said.
Co-ops should also have an “exit plan” in case rebates are oversubscribed, Sloboda said.
“Be honest with folks,” he said, and then use the opportunity to educate them on other ways to lower their energy bills.