How to Increase Your Return on Returns

For people who hate going to the mall, sending gifts using the Internet (especially around holiday time) is ideal for saving time and avoiding crowds.

However, when people receive items that they don't want or need, the ease or difficulty in returning those gifts varies widely between e-retailers.

That's where well-executed online return policies can create significant opportunities for smart marketers.

While some online sellers are becoming very creative when it comes handling returned products, most are not taking advantage that gift recipients are excellent potential customers who have already been exposed to their service capabilities.

In fact, dealing with returns through many online retailers can be rather e-nnoying.

After calling and then packing and shipping a product back to a company, several weeks can pass as the package makes it to the warehouse, is processed and an e-mail arrives stating that a credit or refund has been issued.

In comparison, the ability to take items back to retail stores on the same day that a package is received, no matter how inconvenient, is far superior to a three week wait.

Imagine if a store told you to come back in three weeks before you could make an exchange or get a refund.

eToys has taken a number of steps to differentiate itself from competitors. According to Lou Zambella, senior vice president of operations, “when someone needs to return an item, they simply pack it up, slap the [included return] label on it and drop it off [at the post office or a UPS drop-off] without having to wait in line. Customers can call immediately for exchange or refund processing and eToys will reconcile it later when the return arrives.”

The online toy merchant has done extensive research on returns and found that the inconvenience of returning a product is much more of a negative than the associated costs with making a return. Their aim is to eliminate many of the hassles associated with traditional retailers such as parking, waiting in line and talking with clerks who are not helpful.

Examples of how other well-known companies handle returns show that some do it better than others:

* At, the No. 1 priority is customer satisfaction, and it is evident in their return policy. If you don't want their product, Amazon will send a return label and bear the cost of shipping, regardless of the reason, and issue a credit or refund check.

Customers simply pack the item and leave it for their mail carrier or drop it off at the post office.

* At LL Bean, a mail-order company well known for excellent service, customers simply indicate on the packing slip whether they want an exchange, refund or gift certificate.

*At Barnes& and Disney online, you can ship your returned items but you cannot return products to their stores; Disney will send refund checks to gift recipients. *Online retailer asks customers to pack and ship items and will credit an account once that item is received.

* Toys R customers can either return items by mail or directly to local stores.

* netmarket, an online superstore, requires the person who placed the order to call and get a return authorization number, pack and ship the product, and on receipt, their account will be credited. It is an awkward process when it is a gift because it requires both the gift giver and the recipient to get involved, with the credit going back to the gift giver's account.

*, a computer hardware and software seller, will process requests by gift recipients for credits or refunds but, like netmarket, if it is a gift, it will credit the gift sender rather than the gift recipient.

When thinking about how to improve your return policy, think carefully about how to optimize the experience of all customers.

With millions of dollars being spent on advertising and direct marketing to snare new customers, your interactions with gift recipients are relatively inexpensive and ideal opportunities to build new customer relationships during the upcoming holiday season.

Think about how customers would feel if they didn't have to pay shipping costs for returned and exchanged items.

What if they received a discount on their next purchase (which, in the case of a gift, might be their first purchase)?

Customers who feel good about their experience with your company are more likely to order in the future, and you will have a better chance of gaining a new customer at a relatively low acquisition cost.

Consider the possibilities. If the person processing the return is knowledgeable in the product line, they could suggest alternatives. If customers can't immediately make up their minds about an exchange, companies can consider capturing future gift giving dates and sending e-mail reminders.

As the adage goes, when people have a negative customer service experience they tell ten or more about it. On the other hand, gift recipients who have a positive experience may:

* Become customers for life.

* Tell the sender of the gift, affirming the sender's relationship with the company.

* Suggest the company to others who might consider gift shopping online.

Online retailers competing with online divisions of traditional brick-and-mortar companies must go the extra mile to offer more value to their customers and make it as easy as possible to do business with them. While many brick-and-mortar companies have not yet resolved how to integrate their online and offline businesses to handle returns, eventually they will.

Take advantage of every interaction to make your customers happy and wow them whenever possible to build loyalty, positive word of mouth and profitable long- term relationships.

Jonathan Singer is president of online marketing consulting firm GO /[email protected], Tenafly, NJ. His e-mail address is [email protected]

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