There is a little known business principle that is out there in the retail world. Not many businesses know about it, and fewer still who know how to implement it correctly. For those that do, they enjoy higher profits and repeat business from paying customers. Those that do not, suffer through smaller profits and having their names run through the mud on every Internet channel the customer can find. This business principle is rather simple… Returns are the lifeblood of any retail establishment, and are the best opportunity you get for a good impression. When a customer returns something from your store, you have a one time shot to make a customer for life, or lose one forever.
Unfortunately, the vast number of retailers out there see returns as a pain in the neck. They grudgingly take back merchandise, and make the process as arduous as possible to deter customers from bothering. They look at the customer as though they are doing something wrong most of the time. Finally, they simply return the customer’s money and do not bother to find out why it was returned in the first place. They want to get on to the “paying” customers. The joke is really on them, as the customer that is returning something is a paying customer as well.
So how do you manage turning a return into business profits?
Though it seems contradictory, it really is not. A normal amount of customer returns are going to happen. That is not avoidable. Still, you can limit those returns by following a simple process for returns.
When a customer shows up with a return or refund request, the first thing you should do is smile and apologize for the inconvenience. It makes no difference if the refund is your fault or theirs. The bottom line is you have a customer in front of you that wants service, and you want them as a future customer.
Once you have set the proper tone by letting them know that you intend to be helpful, then ask them if they might explain why the item is being returned. Is it defective, or is it simply not what they wanted after all? Then be quiet and listen carefully. This is the key to the business profits I mentioned. Listen to what they are saying, and you will see an opportunity to either save the sale, or replace the sale with something else.
What follows are the most common reasons for returns, along with how to solve them:
1. They picked up the cheapest option and they now see that they should have bought the better option. This is the easy one. If you give them the chance to explain, you can quickly upsale the better option and actually make more than the original sale.
2. They picked up the wrong thing. Again, you listen to what they have to say. Once you figure out what they intended to get, you sell it to them.
3. They bought it on impulse, and now wish they had not spent the money. This one can be tricky, but if you are careful you can sometimes save the sale. Sometimes simply returning the money is the best move. This is one of those times.
4. They are unsure how to properly use it. Listening is the only way to see this. If you listen, you may hear them mention a frustration that is simply ignorance of the product. For example, a customer returns a cell phone because “the battery does not work properly” and you explain how to properly charge it. If they customer did not know how before, the sale can be salvaged.
5. It was a gift, and they do not like it. In this situation, you simply help them find something they do like. They often will pick out something that costs more anyway.
6. It is defective. Either exchange the product, or help them to pick out a better model.
If you notice every single one of these situations above offer you an opportunity to make money in one way or the other. But what about those customers that simply return your product and get their money back you ask? Those are the most valuable of all. If they come into your store and get a cordial return, they will be back again and again. If they do not, then you can be sure they will tell everyone they know. That will be dollars lost, and that eats into your profits. Give them great service, and watch your profits rise!
