LEAD Your Customers Away From Returns & Exchanges: Increasing Customer Retention with an Adequate Return Policy   by Niquenya D. Fulbright, Professional Life Coach

Product returns and exchanges are a necessary evil in doing business. The method in which a merchant handles returns plays a key role in the company's customer loyalty. Good return policies equal good return customers. As with most systems in business, consumers model the 80/20 rule; 80% of sales come from 20% of the customers. With these types of numbers, every customer should be regarded as a valuable asset. Having a solid return policy will dramatically affect the rate of a company's customer retention.

It is popular sales rhetoric that a satisfied customer tells no one, but a dissatisfied customer goes out and tells ten of his friends. That number can grow exponentially in this, the age of the information superhighway. Bad customer experiences can literally reach tens of thousands of potential customers or clients with just a few keystrokes. The most common reason for customer dissatisfaction is due to inadequate service regarding returns and exchanges. A fair and simple returns policy adds value to the total customer experience. It builds buyer confidence and increases the seller's success in closing. Having a system in place to properly handle returns and exchanges builds customers' trust in the brand and it is very often a crucial element of the buying decision.

Any good return policy should outline a concrete time limit identifying exactly how long a customer has to return their purchase. Standard return times are typically 30-, 60- or 90-day limits. Consider the type of product you sell to determine a reasonable timeframe. It helps to know your suppliers' return policies so you can factor this information into your decision as well. Secondly, you must consider what would be an acceptable condition for a return. Some merchants will accept used or well-worn items while others will dismiss any return that is not in new or like-new condition. This decision is based largely on the item's resale value. Can the product be refurbished, resold or recycled to minimize costs? Next, determine if you will charge any fees for shipping or handling (restocking). If you are an internet or catalog vendor, is your customer responsible for the return shipping costs or will you cover it by providing a preprinted postage-paid shipping label? Will you charge a fee for damaged, incomplete or opened items? Additionally, what procedures must the customer follow to perform a return or exchange? Does it have to be mailed in or can it be done in the store? Will a special phone number be provided to call in for return authorizations? Finally, what exceptions, if any, will be made to the policy? You may want to designate some items as non-returnable due to hygienic issues such as in the case of undergarments. You might want to shorten the length of the return period for a product that is subject to rapidly changing technology like a notebook computer. Whatever the case may be, it is very important to be as plain and specific as possible. Unclear policies can result in the adverse effect of increased fraudulent or abusive returns.

Once the return policy has been clearly defined, it must be communicated to your staff and customers. All employees need to know and understand every element of the policy as well as how and when exceptions may be made. Proper training prevents customers from receiving misinformation. Customers appreciate knowledgeable employees who can speak to company policies confidently and correctly. The return policy should also be printed on all sales receipts and on clearly visible signage throughout the business. Some great locations for signage are on the back walls of the customer service center and checkout lanes, at each individual cash register station or even at the main entrances and exits. Also, if your business has a company website, it would benefit to create a special page for the policy and include a link to it from every page of your online catalog.

Now that your return policy is in place and has been communicated to both employees and customers alike, how do you use the policy to then manage returns? Many businesses use an autodestination system. This is an automated returns management system that assesses the validity of returns and exchanges and chooses how the product should be disseminated (i.e. return to manufacturer, return to sales floor, etc.). There are several good returns management software packages available on the market from trusted vendors such as Microsoft. Make sure you research to determine which package would be most appropriate for your business size and volume.

Furthermore, employees who handle returns and exchanges should be trained to reduce customer returns by using the LEAD process. This method empowers the employee to properly deduce the reason for the return and offer alternative resolutions to discourage the return. Employees must first listen closely to the problem. Listening with sensitivity and generosity to hear what is really going on will help establish if the product is being returned due to lower competitive prices found elsewhere, misuse of an item or if it is indeed defective. Such valuable information can be used to make an exception to the policy or to enlist defensive sales tactics like customer education or matching competitor prices to prevent the return. Empathizing with the customer's concerns and apologizing reinforces the trust that you have actually listened and care about the problem. Ask good clarifying questions to determine a solution that will satisfy the customer's needs. Verify that you have heard and understood the problem correctly, and then offer any available alternative options to deter the return.

Appropriately managing returns and exchanges can make or break a customer relationship. It is important to define a fair and simple return policy that does not vary from customer to customer. It should be firm, explicit and highly visible. All employees must be adequately trained to understand the return policy and how to adhere to it. Returns and exchanges are an often overlooked business-building opportunity. Having a good return policy is the key to a high-percentage customer retention rate and it can have a huge impact on your bottom-line. It has been well-documented that a business is twice more successful at selling to "lost" customers than to new prospects. A good return policy can reclaim disgruntled customers and keep them coming back for years to come.

About the Author

Niquenya Fulbright is a professional life coach with over 10 years experience specializing in business, career, life and relationship coaching. For more information or to schedule a complimentary 30-minute coaching session, visit http://www.niquenyafulbright.com or send inquiry to contactme@niquenyafulbright.com.