Returns Management: Here They Come Again!
Returned goods are an issue for retailers throughout the year, but they can really cause headaches in the aftermath of the holiday sales peak. You can set your calendar by it: customers who, for some reason, aren't satisfied with the gifts they've received or the purchases they've made will begin returning those items en masse even before the first quarter is over.
For your operations staff, it will seem like they didn't even have a chance to take a breath before jumping straight from the frying pan into the fire.
"Returns season" generally peaks in the weeks following the holidays. When it really gets going, you'll no doubt notice some extra strain on your customer service and warehouse operations. And as you create your month- and year-end reports, you'll see how much these product returns affect your bottom line.
While it may be too late to implement significant changes in your internal returns management processes for the current quarter, now is the perfect time to conduct a post-mortem assessment of your current processes and identify improvements that can be made for the coming year. Here are a few key themes to consider:
1. Take care of your customer. Whatever your company's return policy, handle the customer's request for exchange or refund promptly and pleasantly. Years ago, all-star direct retailers such as L.L.Bean and Lands’ End set a high standard for the acceptance and processing of product returns. Their people-first approach endeared customers to them for a generation.
Newer companies like Amazon.com and Zappos have since raised the bar even higher. These well-run businesses create trust, in part, through their return policies that make sense for all.
When a customer returns an item to you, it's one of the key contact moments you have with them; they'll remember how it was handled. Take care of them at this key moment and they'll almost certainly shop with you again.
During your returns peak, don't allow any backlog in physical handling of returns to affect the customer. First deal with the customer, then deal with the physical return.
2. Listen to your customer. There's valuable information to be gained from returns. You must understand the motivations behind returns in any effort to try and reduce them. You'll find that it pays to document the reason for every return. You can then quantify and share this information with other departments within the company — suppliers too — to take corrective action.
Oft-cited reasons for returned products include "damaged," "poor quality," "doesn't fit," "item not as expected" and "changed mind." While you can't prevent a customer's change of heart, communication with packers and shippers, product developers, and vendors can minimize damaged product and ensure a consistent fit within your product lines. With rigorous enforcement over time, customers will respond by returning fewer items.
Furthermore, working with creative resources can enhance the accuracy of product photos and descriptions in your marketing sales channels. Whenever and wherever possible, target your marketing message to match your customer's perspective. Something as simple as showing front, back and side images of a product directly reduces returns.
Lastly, take another look at your "Returns By Reason" form. Don't simply list 10 reasons in random or alphabetical order, as the customer will likely select the first item on the list. Make it easy for them to understand by listing categories of reasons for returns (e.g., quality, damage, fit, etc.) to choose from so it's clear to all what prompted the return.
Joe is Vice President of Product Solutions at Software Paradigms International (SPI), an award-winning provider of technology solutions, including merchandise planning applications, mobile applications, eCommerce development and hosting and integration services, to retailers for more than 20 years.
Joe is a 34-year veteran of the retail industry with hands-on experience in marketing, merchandising, inventory management and business development at multichannel retail companies including Lands’ End, LifeSketch.com, Nordstrom.com and Duluth Trading Company. At SPI, Joe uses his experience to help customers and prospects understand how to improve sales and profits through applying industry best practices in merchandise planning and inventory management systems and processes.