Handle Returns So That Customers Will Return

In today’s soft economy, many multichannel marketers are trying to significantly reduce returns in order to boost profits. Some companies are putting more restrictions and conditions on returns, which I think will cause further erosion of sales. After all, who really wants to buy a product that can’t be returned, or that carries so many conditions for return?

Others, however, are doing what I call “save the sale.” They’re working with customers to help them understand the product and how to install or use it. Electronics, software and technical products are far and away the biggest problem areas that could benefit from this approach. For example, in the last two weeks, our firm had lengthy, painful experiences with two of the major U.S. software companies. One of our employees spent five hours on the phone with an India-based call center while trying to install a new version on a laptop. If we had any choice, we would’ve asked for our money back.

Bill Crutchfield, founder and president of consumer electronics cataloger Crutchfield, learned early on in his business about customer returns. He told one of our benchmarking ShareGroups that he almost quit the business more than 20 years ago because returns were so high. Luckily before he did so, he decided to call many of the customers who were returning products to find out why. What he learned was that customers were frustrated by not being able to install the company’s car stereos in their vehicles. There were no instructions provided by the vendors! He realized he’d have to invest in documenting how to install those products in each and every vehicle.

Today Crutchfield has a database of thousands of models that its technicians can use to talk customers through the installation. It’s also developed product mountings to hold the products to the car dashboard and interior, and it produces customer vehicle-specific instructions with pictures. In the end, Bill Crutchfield’s lesson resulted in one of America’s largest, most innovative and customer responsive multichannel marketers.

Lifetime Return Policies
I’d follow the leadership example of companies like Lands’ End and L.L. Bean, with a “no quibble” guarantee. Here’s a true story about L.L. Bean: All of its original Maine hunting boots had product problems and most were returned. Company founder Leon Leonwood Bean stayed true to his word and refunded the purchase price. But he also stuck with it, correcting the problems and posting a sign in his store: “I do not consider a sale complete until goods are worn out and the customer still satisfied. — L.L. Bean, 1916.” If you go to Bean’s Web site (www.llbean.com) and look under “Company Information,” you’ll find many other sterling things it has to say about customer satisfaction.

Drawing upon our own experiences and the Crutchfield and L.L. Bean examples, here are four action points to consider regarding returns.

1. Dig into the reasons for returns through return correspondence, Web and chat messages, and most importantly, call-center dialog.

2. Merchants should buy net of planned returns rather than gross demand to lessen effects on inventory levels.

3. Returns cost more than orders to process. Streamline processes and systems to accommodate returns.

4. Credit customer accounts quickly. Customers are at their credit limits. Lagging credits and refunds add to customer dissatisfaction.

Remember: How direct marketers treat their customers helps them differentiate the customer shopping experience from that of the mass retailer.

Curt Barry is president of F. Curtis Barry & Co., a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory and benchmarking. Learn more online at http://www.fcbco.com .