The just-concluded holiday shopping season will make or break many annual financial performances in an already challenging economic climate. And it will be followed, inevitably, by the holiday returns season.
Putting returns in perspective, Accenture research has found that the cost to retailers and manufacturers of CE product returns in the United States in 2007 amounted to approximately $13.8 billion. These costs totaled 2 percent to 3 percent of revenue for the average retailer, and 5 percent to 6 percent of revenue for the average CE manufacturer.
But when tested by the retailer or vendor, only 5 percent of the returned products had a technical fault.
These problems are serious, but our research tells us that the majority of returns may be avoided through additional focus on customer education and support. Dealers and vendors should therefore consider the following five steps:
First, vendors should help their retailers provide clear, factual and concise selling messages to customers for their highest return-volume products. Operate under the premise that customers do not purchase products intending to return them. A return is an inconvenience and intrusion on their limited personal time. Do whatever possible to ensure retailer sales personnel provide clear messages to potential buyers about the use and features of your products so that customers fully understand what they're getting in the box and how to enjoy it.
Second, vendors should place as much visual and graphic information as possible — factual as well as comparisons — about their products on their Web site. Vendors should also make this information available and accessible for inclusion on retailers' Web sites. These postings should include graphic instructions on how to set up and use the products, not just technical specs, features and compatibility facts. A substantial portion of returns occur simply because the consumer could not effectively install or use the product and did not see an easy path to getting help.
Third, ask customers to call you, the retailer, before they return products. If you don't yet have your customer support phone number on a flyer or sticker that goes in or on the box, do so. Accenture has seen this simple and low-cost action move the needled on return rates considerably for all types of CE devices.
Fourth, put your top-performing, most technically astute customer care representatives — and potentially augmented by technical personnel from other organizations such as product design and manufacturing — on the product returns cases. Establish a returns specialist team to manage the technical support phones during and after the holiday season and arrange for calls to be routed to them to help save sales.
Fifth, for complex products with exceptionally high return rates, vendors should consider subsidizing all or a portion of the cost of additional retailer customization, set-up, and service offerings, including installations, data transfers and configuration. Our research, as well as experience with retailers, has shown that these services severely reduce the likelihood of subsequent returns.
No doubt amid this global economic predicament cost cutting is emerging as a top priority for dealers and manufacturers. The benefits of taking action now will only grow when the economy improves, and the extra attention to the returns issue might turn these typical costs from losses to profits.