What are volume refunds?

The formula is simple and safe you have found as a consumer in the most varied businesses: from a grocery store to a bookstore or a gym. "Pay two and take three" or "for the purchase of five units you get half the price of the other products you order", would be an advertisement of the first two, or "the payment of the annuity makes the value of the month is reduced to a tiny fee", they would tell you in the last case.

For everyone, the same rule applies: the more quantity, the higher the levels of refunds or bonuses come into play.

Volume Incentive Rebates ( VIR ) are an incentive strategy that allows you to buy a considerable number of inputs or product lines in exchange for more favorable conditions.

This can be of two types:

  1. Non-cumulative refund: applied to a particular order, in which a single transaction is generated. Depending on the size of this, the reduction can be greater or lesser. Imagine a wholesaler in front of your cash register that after entering the list of products to take indicates the relevant discount. This translates for the seller into a decrease in sales expenses as orders grow, so the savings of this percentage are shared with the same buyer.
  2. Cumulative refund: This is based on the sum of purchases over a given period of time. At the end of it, also depending on the total number of businesses traded, the respective rebate is applied. Thus, it is aimed at frequent purchases that allow a loyalty link between seller and customer, such as airline mileage programs.

Wholesale Benefits

As you can see, it is a win-win relationship with benefits for both parties. According to the website Impulsa Popular, "it is recommended that SME entrepreneurs in retail stores apply special bonuses to attract more customers on a regular basis." Thus, it is possible to build customer loyalty and sell more units in a defined period of time.

For its part, the company 360insights summarizes the benefits of this type of programs:

  • Sales Maximization: Provides engaging programs for channel representatives to drive channel enrollment and increase sales.
  • Trust and loyalty: Provides fast and accurate global payments to the channel to build trust and brand loyalty.
  • Performance optimization: effectively identifies which products are working to know where to focus in order to improve the next steps.
  • Behavioral Measurement: Allows you to monitor and understand sales channel behavior to create predictable results and proactively adjust promotions.

Reasons to offer a purchase volume bonus

In a 2013 article, THINK&SELL creator Jorge Gonzalez noted that there are only four reasons to offer a volume refund:

  1. Take advantage of the so-called marginal utility law. It considers that utility increases with the consumption of goods, although more and more slowly. You can see this in the difference in the value of a large drink in relation to the additional price of ordering more than one small soft drink.
  2. Competition with rivals that offer discounts. The bar is set by the market, made up of your competitors, who in turn require you to implement discount programs. Think of it as that competition of great rivals of the sport, whose performance of each one requires the other to make a leap of quality, in this case of approach to your respective customers.
  3. Get one large order instead of several small ones. Consider joining a club for a year, such as the gym example from the beginning. In this way one's business obtains liquidity and the new member generates a significant return, given the added cost of a monthly payment.
  4. Retain customers. Loyalty becomes the long-term goal of these types of well-defined pricing strategies. As Gonzalez argues, this helps preserve market share and derails the plans of the "upstarts."

This last point coincides with the budgets of purchasing consortia such as ConsorcioTec, which among its benefits has reimbursements from suppliers for purchases made through its network. And this is just one of the means in which this group generates value.

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