Monday, June 15

Are register rewards worth it?

Photo by Evelynishere


Or do you just end up spending more?


Staples, Walgreens, and now even grocery stores are using "savings" programs that are mainly designed to make you a repeat customer. Even if it's somewhat forcibly.


The stores offer savings in the form of credit against future purchases. So while you think you're saving in the present, you're really saving in the future. Or, looked at another way, you're simply enjoying the benefits in the future from money you already spent in the past -- all while thinking you're getting a good deal. It's a tad dizzying, really.


Let me give an example: Walgreen's recently advertised Kashi cereal as 3 boxes for $7. You bought 3 boxes, paid $10 and got a $3 Register Reward slip. You can use that slip on your next purchase at the store.


So, in fact, you're not saving money on the cereal. You're saving money on future purchases. There's a pretty big distinction.


One of the main problems here is that Register Rewards (and programs like them) expire. So, like rebates, there's a good chance that people won't use them. The company gets product sold, makes about the normal profit and customers come away feeling like they got a great deal. How could companies not love this process?!


Second, there's the old double-accounting trick. At least, that's what I call it. I'm very susceptible to it. I attribute that to the following: My brain is continuously distracted by random thoughts, lists of errands and any nearby shiny objects. Once you add the fog that rolls in with my readily accessible fatigue, you've got a former calculus student working up a sweat trying to do basic math some days.


So, when I use these programs, it's pretty common for the ole' gray matter to account twice for savings that occur only once. Such as: "Golly, it's so cool that I just got 3 boxes of Kashi for $7" -- even though I just paid $10 -- and then later, "Hey, while we're here, I'm going to get this candy because it's practically free. I have a $3 off coupon!"


See what just happened there? (If so, you're often one step ahead of me.) The discount got used in two different ways. So, in my mind, I saved $6. In fact, the "discount" only works if I buy something I'd buy anyway.


And, as I said before, you could question whether I would save any money at all, really. I'd pay $10 for 3 boxes of Kashi. Then, I would come back to Walgreen's and spend my $3 in Register Rewards. Since your item has to at least be equal to the RR slip, I'd end up paying 27 cents in sales tax.


So, I shelled out a minimum of $10.27, got a $3 certificate, and am being told I got it for $7. Anyone else see a logistical problem here?


If you plan ahead, you can avoid some of the confusion inherent in such complex transactions. For example, I bought three boxes, received my RR slip and gave it to Tim. While his three boxes were being rung up, I went back and got the last three left on the shelf. When I came back, he handed me his RR slip.


So, we paid $10, $7 and $7. In all, we got 9 boxes for $24. That's $2.67 a box -- or 34 cents more than advertised. Oh, and now we have a leftover RR to use for our next drug store need. Definitely not the worst deal in the world. It's a heck of a lot cheaper than the usual $4+ grocery store price and even cheaper than the large boxes at Sam's Club. Even if we let the RR lapse.


Since all of my prescriptions are at Walgreen's, this isn't a big deal. But if you're not a regular shopper there, the store just guaranteed that you'll make a return visit. (If you don't, it doesn't have to give you the discount, so it's win-win.)


And most people don't just get the one item at the drug store. There are a few hard-core shoppers who can manage it. But for most, these Register Rewards act like loss-leaders. They lure you into the store for one cheap item; then you come out, dazed, with an arm full of stuff and a significantly lighter wallet.


It's insidious.


***


Albertsons has been doing something similar around once a month. If you buy $25 worth of certain products, you get $5 off. You have to look closely (or, at least, I did) to notice that it's in the form of a $5 credit toward your purchase the next week. Good only for that week.


Tim and I had to work carefully to be sure that we a) used it before it expired and b) bought only essentials with it, lest we fall prey to the notion that it was "free" money. These days, I only participate in those deals if I actually need $25 worth of the products. I rarely do.


***


For a long time, Staples/Office Depot/Office Max let you return empty printer cartridges. Each cartridge netted you a $3 discount on a purchase. Maximum of three a day.


This was a great way to get a discount on ink. Or get shipping supplies if you ran a small business. My mom actually collected cartridges at the University of Washington, where they were simply being thrown away, and would use the discounts to buy and donate school supplies: backpacks, binders, pens, pencils, and more for families who couldn't afford those items.


Then the stores wised up. Now, you can turn in as many as 25 a day (at least, at Office Depot) but the discount comes later. Once a quarter, to be exact. And the credit is valid only for a couple of weeks. If you miss that window, too bad.


This means that people will be rushed and panicked, especially if they wait until the last minute. They won't want to "lose" the credit, so they'll buy things they probably didn't really need. This easily leads to excessive spending, which means a profit for the company.


Really, though, the company wins in two ways:

  1. People think small with small amounts. But as the amount grows, so does their imagination. So, if they get a $3 -- or even a $9 -- discount, they'll probably spend it carefully. But, over the course of three months, those discounts accumulate. When they get up above $10 or so, people start to think bigger. If they get it up over the $20 or $30 mark, they're likely to see it as a way to get a discount on a big ticket item. So what they once would have used to get things free, now becomes a means to afford expensive purchases. Nice little deal for the company.
  2. People have to come back in. In order to use the credit, which most of us begin to think of as our due, we have to go back. Or on to the website. Either way, the store gets us back in -- and in a mood to consume, no less!


Of course, the stores lose out on people like my mom, who simply stocks up on paper and ink and rarely goes over her credit amount. Perhaps soon enough they'll change it to something that necessitates purchase? As in, "Get $40 off (a purchase of $75 or more)."


I certainly hope not. But I think it's important for all consumers to remember that companies create rewards programs to get customers in the door. In other words, no rewards program is completely selfless -- all have ulterior motives. These programs are created to get you in the store, spending. It's a careful balance for the companies: Good enough rewards to keep customers happy, without losing too many profits.


In other words, remember that companies create (and tweak) these programs to always be in their best interest. So long as you remember that, you stand a better chance of actually getting a deal.


Good questions to ask are:

  • Would I normally buy/use these products?
  • Will I actually use the products (or reward)?
  • Is it in my financial interest to use the reward?
If the answer to any of the above is "no," taking advantage of the offer will more than likely lead to you, wandering aisles of a store, trying to find things to buy. Things you don't need. All so you can take full advantage of a deal that isn't really that great a deal.
If you simply remember that even the best rewards programs are part of a capitalist business, you will have, I think, a better chance of getting real value from these programs.

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2 Comments:

Blogger Alissa said...

One more problem with these register rewards is that the little printed out slips can be lost. Trust me. I guess I should treat them like cash and keep them in my wallet, but they aren't cash and that gets messy and confusing. After having lost "money" this way, I now tend to avoid anything where the discount is a register reward unless I really, really need the item.

June 15, 2009 at 5:53 AM

 
Blogger Abby said...

Alissa,

I, too, noticed the small size. Immediately knew I'd lose it. So I stuck it in my coupon organizer. It was the poor paper's only chance not to be sucked down into the depths of my purse, never to emerge again!

June 15, 2009 at 12:04 PM

 

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