Seven Ways to Improve Returns Processing

Jan 05, 2006 2:43 AM  By

Everyone knows that a positive shopping experience increases the likelihood that a customer will purchase again. Returns processing is a customer contact point and as such can provide you with a competitive edge, so long as you handle it properly. That’s why returns have moved from the dark side of marketing and operations to the forefront. Reverse logistics is now recognized as an important part of the shopping experience. The best returns processing is quick and painless for customers and the company, expediting the process, reducing time, and costs.

Companies with high-volume returns are creating proprietary software or using third-party logistics providers to manage this process. Companies without the volume that justifies the resource allocation can improve their process with these solutions:

1) Communicate, communicate, and communicate. Let customers know how to return before they make a purchase. Provide the information on the Website, in the catalog, and at the store. Include information about the returns process in every package and on the back of every receipt or packing slip. Include a return label with each order, and provide the ability to print return labels from the Website. This will reduce the returns sent to the wrong location and improve the quality of the processing information.

2) Keep it simple. The best return policy is 100% money-back, satisfaction guaranteed. It will simultaneously improve sales, service, and customer relations. The number of satisfied customers will grossly outnumber the few people who abuse the policy. Adding extraneous “if then” content confuses customers and creates a logistics nightmare. When customers are unsure of how to submit a return, they improvise. The result is increased processing costs and reduced customer satisfaction.

3) Discourage crossing channels unless the process is seamless. Credits issued for items purchased online and returned to the store should be valid on both channels. Anything less is frustrating to customers. If multiple systems are the challenge, replace “How do we…?” questions with “What if we…?” questions. If the benefits of the “What if we…?” questions are strong enough, the “How do we…?” answers will be found.

4) Keep it simple, part two. Place a code on return labels and packing slips to identify the original purchase source. This will expedite the returns process when multiple systems are involved. Eliminate return authorizations requirements except for customized products. It will delete several steps from the returns process, saving time and money.

5) Include returns processing in your benchmarking program. Process returns as fast as or faster than purchases. Customers have less patience with returns than they do with the original purchase. They want confirmation of the return receipt and expedited processing of their credit or exchange. Always remember that this is the breaking point for many relationships. There are five reasons for returns: customer choice; poor quality; slow delivery; fulfillment error; and product misrepresentation. Customer choice provides few options except to accept the return and process it quickly. You can reduce the return rates for other four reasons, however, by improving product management and operational efficiency.

6) Know your returns processing costs. Include everything from incoming freight to liquidation. Use this information to determine the most efficient way to manage return issues. For example, if your returns processing cost is $7 and a customer calls about a broken $4 item, sending a replacement without requiring the item’s return will save you money.

7) Plan your liquidation strategy before the first sale. Liquidation opportunities abound in the multichannel marketplace. Returns of active items should be returned to stock quickly for resale. Discontinued items can be sent to stores, sold at your Website, auctioned on eBay, or sold to a liquidator. Damaged product can be returned to the manufacturer or sold through other channels. Whatever the options, have the plan in place so that the items are distributed to the proper location as soon as they are processed.

Debra Ellis is president of Wilson & Ellis Consulting ((www.wilsonellisconsulting.com), a Barnardsville, NC-based firm specializing in operations and customer relationship management.