Returns, Returns, Returns...

Image by mringlein via Flickr

On several occasions I have mentioned how important it is to have a good return policy. Too many small retailers fear the thought of returns and institute somewhat draconian measures to deal with that fear. While this may result in fewer returns it also results in fewer sales because the competitors have better return policies.

Many times a small retailer will only offer in store credit on returns and some even add a restocking fee on some transactions. This type of policy will only send customers to competitors because the big box stores and many on line retailers will give refunds on purchases.

Now lets take a look at an extreme example. Say a customer purchases $150,000 in product, and the needs to return $20,000 of that product. While this kind of return would seem to be devastating in its amount, it is close to the 10% mark that I suggest you keep out of your sales to compensate for possible returns.

While the return amount may be hard on you to deal with, your customer invested a great deal of money with you and it is important that you take care of them. If you are hard nosed about the return, how do you think that person will react and tell their friends? On the other had if you take care of the customer how will the customer react and what will be the information conveyed to the friends?

Remember, word of mouth advertising is one of your most important marketing tools at your disposal. Word of mouth can make or break a small business so it is important to keep it positive. While it is impossible to please everyone, making your return policies reasonable will go a long way to keep your customers coming back to you instead of going somewhere else.

Adding On...

Image via Wikipedia

Are you adding on to the services you are providing?

If you are a fan of Jeff Foxworthy you probably think of his number about McDonalds and their attempt to add the Hot Apple pies to people coming through the drive thru. Adding on to products and services can also have a negative cogitation because of the way some companies push extended warranties.

So why would companies push an add on even though it might be considered pushy by the customer?

Let’s take an electronics store for example. It may surprise some people that there is little to no mark up in electronics. A store selling a business laser printer may make anywhere from 2 to 10% of the sale of that machine. It is a big sale but it is not making a lot of money. Now if an extended warranty is added to the transaction that could be anywhere from 50% mark up or more, you can see why some companies can get really pushy about getting those warranties.

However, you as a small business owner is trying to build customer loyalty, so pushing products that the customer may not think is necessary will only alienate them and cause them to shop elsewhere.

So how do you get additional items added to the sale without upsetting the customer?

First of all, you need to use proper salesmanship. I have gone over sales presentations in the past and will refresh that information in the near future. You need to ask your customers questions and listen to their answers and they will tell you what they need.

Let’s use the example of selling a printer. Most printers do not come with USB cables because the manufacturer doesn’t make any more money building the printer than the electronics store makes selling it (the manufacturers make their money selling the ink).

One of the questions you can ask your customer is if they already have a USB cable and is it long enough. Another example is that they may tell you during the conversation that they will be printing brochures so a natural add on would be to ask them if they will need any brochure paper.

So how does this build customer loyalty? You are finding out exactly what the customer needs to insure that they do not have to turn around and come back to your store or more likely go to another store to get needed supplies. I cannot tell you how many times people came into my store and said they bought a printer and the salesperson never mentioned that they would need a USB cable so the had to come to our store to purchase one. Do you think they were happy with the salesperson at the other store?

There is other ways to get additional sales.

Service businesses can also benefit from this and since I have several friends who are professional photographers, I will use them as an example.

During my wedding, our wedding photographer mentioned to several families that he also takes family portraits. He ended up doing some shots of families at the wedding in addition to the pictures of us. Since he was already at the wedding, this extra business only cost him a couple of rolls of film.

If the photographer did one wedding per week, think about how much additional revenue he could make by just getting one family per wedding to do a portrait session.

Getting an add on to a sale not only can help your revenue but it can also help you build customer loyalty by ensuring your customer leaves your store with everything they are going to need in order for the product to solve the customers problems.

Also, be on the look out for additional ways to increase your revenue stream to make your business more profitable and successful.