Customer Service: Raise-the-Bar Return Policies

Summary: This week, an article in Newswise, the collegiate news wire service Keuka subscribes to, cited a study published in the Sept. Journal of Marketing which recommends online retailers utilize universal free return policies. The study found that when customers got free shipping returns, their repeat purchases in the next two years increased 58-357 percent, versus drops of 74-100 percent on future purchases when customers had to pay shipping on returns. Two other online articles, one in Time Moneyland by Golden Gate University professor and consumer psychologist Kit Yarrow, and a blogpost listing of the Top 10 retailers with the best return policies, supported the contention that return policies, and especially free shipping on returns, can make or break the customer relationship.

Reflection: Each author and/or their publisher was highly qualified to present these findings, including Casey Bond (GoBankingRates, 2012), whose professional profile includes promotion to managing editorial position at age 25. I saw parallels to my own customer return experiences, even if there is no direct correlation to my workplace, a college that does not offer refunds nor “returns” on degrees. :)

I STRONGLY agree that if an online retailer offers free return shipping, and makes returns as hassle-free as possible, I am very likely to make repeat purchases and recommend them to others. I can contrast online purchases from accessories icon, which does not include free shipping on returns, with outdoor & clothier Sierra Trading Post, which includes a no-cost return shipping label with every purchase. The VB company web site offers far better selection, and usually, pricing, especially on sale or clearance items, than “authorized” retailers, but return shipping charges are a turnoff and decrease the brand’s value with me, especially after paying shipping on the original purchase. STP has made use of a great story on their satisfaction guarantee page, posting an image of worn-out sneakers and the return letter that accompanied them as proof positive they keep customers happy with returns!

Zappos was cited by two authors as among the gold standard for CRM for online retailers. I think more companies need to trial-run Zappos-style return policies for say, a year or more, before squawking about profit losses on returns. Electronic tracking, and ultimately, restricting of “returnaholics” seems like a sensible solution to contain costs on those who would abuse the system, and could be a great experiment for the many retailers hesitant to absorb another CRM service cost. It seems the best-practice companies put greater emphasis on their relationship with customers over retail transactions. Within that perspective, free return shipping is a strong factor in building trust, loyalty and perceived value, and I would want to apply that mindset in positive, pro-active ways to my own marketing practices.

M.S. in Strategic Marketing, Cohort 6

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One Response to Customer Service: Raise-the-Bar Return Policies

  1. Jill Kemp says:

    Absolutely agree! A real person answering the phone quickly and easy, no-questions-asked returns are two of the true differentiators for Zappos. Businesses are constantly citing Zappos as a model to follow for exemplary customer service, but not much appears to be changing! Zappos now offers consulting services to help other businesses improve their customer service. Another great idea from a great company!!