Returns: Turning the Bad into Good

Wouldn’t it be great if consumers were always happy, never changed their minds and never returned the product that they ordered? Just think of the savings in cost, hassle and the need to staff customer service agents. What a boost to the bottom line that would be.

Now snap out it! We all know that’s not going to happen. Therefore, Marketers need to be prepared for returns. A well-thought out strategy and procedure for handling returns can help reduce them, lower costs, and potentially create a revenue source.

Reducing Returns
The first step is to anticipate reasons that your campaign might experience returns. Most common reasons include: incorrect address, COD and refusal to pay, customer moved, buyer’s remorse, product did not meet customer’s expectations and product quality issues such as packaging, shipping damage and missing components. The best payoff is before your campaign launches. If you are already running, you still can benefit from an analysis.
Step two is to act on this analysis. Examples of actions that will reduce returns include: use address verification software to scrub orders before shipment; restrict COD payments; processing orders quickly with minimal transit times will decrease buyer’s remorse; communicate accurately the product’s performance and benefits; ensure strong quality control measures in production, assembly, pick-pack and shipping.

The Return Process
Despite efforts to reduce returns, the inevitable will still occur. Now you must make the most of the situation. There are essentially two schools of thought.

1) Make Them Jump Through Hoops. The burden is on the customer to package the product, go to the post office and pay retail postage rates. While this certainly deters some returns it can also create bad will, which may hurt the Marketer. This option is risky for branded products and well-known companies. This may discourage repeat purchases and you may have lost a customer for life. Worse yet, if this results in negative social media for the campaign, you hurt yourself more than you gain in inbound freight savings.

2) Be Supportive and Gain a Customer for Life. Offer a convenient returns program that includes a return label allowing the customer to print, affix and then conveniently enter into the mailstream. This sends a powerful message that the Marketer is honest and responsible, which at a minimum will prevent backlash from the consumer and more so, potentially solicit a future sale.

There’s more. By controlling the return method, Marketers also control the postage price. The Marketer’s return program will be far less expensive than what is available to the consumer, which retail postage rates. If the Marketer pays for the return postage, it’s an obvious win. If the consumer is required to pay, this can be a profit center for the Marketer. Imagine selling the convenience and economy of the return label at a price that represents both a savings to the consumer and a profit for the Marketer. Now you’re making money on a return while creating goodwill with the customer. Wow!

Furthermore, since you are in the driver’s seat, you can notify the customer of the return status, dramatically reducing customer service calls. Techniques include emails confirming the package is in the mailstream and on its way, when it arrives at the warehouse and finally when processed.
Lastly, sell the benefit of a convenient return process in your offer. It will help your conversion rates.

Processing the Return
When the return hits the processing center, it is important to have well-designed procedures in place to open, inspect and evaluate the return. Then the customer can be credited (and notified, of course).
Now the work on the physical product begins. Any product or components that can be saved will result in cost savings. What is wrong with the product and components? What can be reused? This leads to refurbishment – clean, adjust, rebuild, repackage.

Recycling of components and items can be done on several levels. These can be returned to the manufacturer. Or they can be rebuilt at the processing center and injected directly back into the inventory stream.
When to rework/refurbish/recycle is tied to the product characteristics. High value items merit analysis for saving as much as possible. A product line or offer type that has an historical high rate of return creates a large pool of units to examine. A solid historical pattern of usable product and/or components should encourage the Marketer to set up a program.

In Summary
Look to your fulfillment partner. If they have the capabilities to support such a program it should encourage you to try. Develop a sound and comprehensive plan that will delight your customers, reduce your costs and provide a revenue stream and then the impact of returns will be minimized.