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.

Building Customer Loyalty

Image by Angela Radulescu via Flickr

How loyal are your customers to you?

The answer to the question could be what stands between success and failure of your small business. Today you see many major retailers trying to build customer loyalty through their so called rewards cards. It is the latest attempt to keep customers coming to their stores as opposed to their competitors.

But what can you do to create customer loyalty?

The Freelance Folder blog has several ideas to build your customer loyalty.

The first idea they mention is to add a human touch to your service. When is the last time your tried to call a company on a 800-number and have been totally frustrated with the results? Make sure that your customers are able to reach someone that can answer their questions.

While I have said it is OK to outsource some projects, you should never outsource anything that will affect the service that your customer receives. These days too many companies are outsourcing their customer service functions which in the long run will only harm the experience the customer has when they call.

An outsourcer can provide the same level of customer service that you can because it is your business and to them it is just another account.

Another important way to build customer loyalty is to take care of the customer no matter what. To often small businesses have return policies that are too restrictive and cause them to loose customers in the long run. While a return always hurt, a customer that is able to return a product without problems is more likely to come back and buy more than a customer that cannot return a product.

The best way to deal with returns is to set aside a certain percentage of your sales to compensate for returns. This way you are not being caught by surprise with a really big return that you are not expecting.

Building customer loyalty should be one of your biggest priorities. It will mean the difference in the long term future of your company.

Be Consistent

One of the most upsetting events that customers encounter is inconsistent policies especially toward returns. If you are a chain and have multiple locations, this can be created by different managers having different policies. This can also be created in a single store if all managers and the supervisors are not on the same page.

Here are some suggestions to improve this situation:

1. If you are a chain make sure that all your stores follow the same policy. Put the policy in writing and make sure all the management follows the policy.

2. If you are a single store make sure all the people in the store that make return decisions are on the same page. Write down the policy and ensure that all employees are trained properly on the why, what where of the policies.

3. While you do want to protect yourself against fraudulent returns, make sure that your return policies are not so stringent that you are sending customers to your competitors.

4. Go to all of your competitors and find out what there return policy is. Go even further and buy products from the store and see of they follow their policies. See how they react to the returns and if they try "save the sale".

5. Make returns seamless whether the customers has purchased in your bricks and mortar store or purchased on line. Nothing is more frustrating for a customer than to buy something on line and not being able to return in the local store or worse, the store telling the customer there is nothing we can do or there a separate operation.

6. Many customers think that if they go "over the heads" of regular employees management will do what they want. Once again you must have a policy in place that not only allows the customer to fell as though they are being treated right, and gives the employee the knowledge that management is behind them. Once again the best way to make this happen is have a customer friendly return policy.

Once again, one of the biggest frustrations customers have with stores is inconsistent policies. Work as a team to build workable policies that will work for the company but also work for the customer.