Executive Briefings

The Supply Chain Is Not a One-Way Street

For most supply chain professionals, the main focus on the flow of goods lands somewhere between the procurement of raw materials and their delivery to the customer.

Lately there has been considerable attention paid to modeling, simulation and analytics within the supply chain, ensuring initial deliveries will meet demand and that replenishment can be timely and achievable at a reasonable cost. But an often overlooked part of the process relates to reverse logistics - the process of managing returns, processing refunds and the various customer touch-points visited along the way.

In these days of liberated return policies, satisfaction guarantees and customer rights, there are increasing opportunities to build a relationship with your customer, save the sale and even increase order values through creative up-sell and cross-sell programs.

It is a simple opportunity to leverage, one that directly affects revenue and the bottom line, but is often overlooked within the supply chain industry. Providers only need to follow a few basic rules:

Build a fair return policy into your P&L and reserves. Quality customers should always be top of mind when writing your return policy. Consumers want easy returns, including reasonable time frames, the ability to receive credit and no penalties for making the return or refund? How quickly should customers expect to receive credit or a new product? What condition does merchandise need to be in before it can be returned? These questions and more must all be detailed in your policy.

Clearly state your policies in all your sales channels. Clearly articulated standards around returns and refunds should be laid out clearly for customers and potential customers wherever the company has had a presence - online, in print, on sales collateral, and so forth. In general, a "click-to-agree" or other affirmative button signifying acceptance of your policy should be displayed on any online checkout screens. Clearly communicating your return policy to customers prior to a sale can help prevent chargebacks and reinforce your case if a dispute does occur - and it is simply good customer service, too. Create your policy in as many places as possible and enforce it without exceptions.

Understand how your payment processor and merchant bank views returns, refunds, and calculate their reserves. Most merchant banks require that return and refund policies are made conveniently available to customers to prevent misunderstandings. All merchant banks maintain a chargeback threshold - for instance, if a bank's threshold is 2 percent, it may sever ties with you once your chargebacks reach 2 percent of your sales for a given period. When shopping around for a bank to partner with, take their section on thresholds into consideration. Ask if the bank has a chargeback management staff to aid in customer disputes. Most importantly - especially if you are doing most of your business online - ask whether or not your business would be considered a high-risk merchant account. If so, this would likely necessitate a reserve account being set up in your name, which can in some cases severely inhibit company growth, including funds for marketing, capital investment and cash flow.

Process returns and refunds promptly. Within the supply chain, everyone is affected by customer dissatisfaction, returns and refunds, which can cost two to three times a standard order depending on the product - but merchants are affected the most. The actual return is not the risk, either, but the lack of issuing timely credits that can negatively affect the merchant. The smartest supply chain providers utilize advanced order management systems (OMS) that benefit merchant account relationships by simplifying the return and refund process, preventing chargebacks and maintaining high levels of customer satisfaction. When a customer is unhappy, not only does the merchant run the risk of losing the customer, it runs the risk of losing their merchant account altogether if too many refund requests pile up and are not processed in a timely manner. Streamlining the return and refund process and cutting risk is an essential and attainable goal - one any successful marketer must drive to achieve.

Use each of these customer touch-points as an opportunity to save the sale and build a relationship. It is considerably less expensive to build on an existing customer relationship than acquire a new one; it is also a missed opportunity when you do not transform the return process into a moment for customer satisfaction. Save the sale programs - which can yield as much as a 60-percent recovery rate - run effortlessly with the right OMS in place, which can allow for payment returns, offers and shipping frequencies to be changed quickly and easily to fit the customer's needs. It is also beneficial to offer the customer free shipping, special customer discounts or delayed payments on a case-by-case basis. The opportunity to up-sell and cross-sell during the refund and return process is an important consideration to drive revenue and profits up as well. Following up with an e-mail thanking customers for contacting you with their issue is also a great way to drive sales and continue to build the relationship.

It is generally thought that good customer relationships are built in the beginning - when a customer orders a product of their interest and is satisfied upon delivery - but the truth is this relationship is strengthened when the marketer deals well with issues after the order, and the customer sees how effortless the return process can be. So put forth the energy to make yours as efficient as possible, advertise your policy clearly, train your employees to use these interactions as moments to not only satisfy customers but boost sales, then stand back - and watch your business thrive.

Source: 3PL Worldwide Inc.

 

For most supply chain professionals, the main focus on the flow of goods lands somewhere between the procurement of raw materials and their delivery to the customer.

Lately there has been considerable attention paid to modeling, simulation and analytics within the supply chain, ensuring initial deliveries will meet demand and that replenishment can be timely and achievable at a reasonable cost. But an often overlooked part of the process relates to reverse logistics - the process of managing returns, processing refunds and the various customer touch-points visited along the way.

In these days of liberated return policies, satisfaction guarantees and customer rights, there are increasing opportunities to build a relationship with your customer, save the sale and even increase order values through creative up-sell and cross-sell programs.

It is a simple opportunity to leverage, one that directly affects revenue and the bottom line, but is often overlooked within the supply chain industry. Providers only need to follow a few basic rules:

Build a fair return policy into your P&L and reserves. Quality customers should always be top of mind when writing your return policy. Consumers want easy returns, including reasonable time frames, the ability to receive credit and no penalties for making the return or refund? How quickly should customers expect to receive credit or a new product? What condition does merchandise need to be in before it can be returned? These questions and more must all be detailed in your policy.

Clearly state your policies in all your sales channels. Clearly articulated standards around returns and refunds should be laid out clearly for customers and potential customers wherever the company has had a presence - online, in print, on sales collateral, and so forth. In general, a "click-to-agree" or other affirmative button signifying acceptance of your policy should be displayed on any online checkout screens. Clearly communicating your return policy to customers prior to a sale can help prevent chargebacks and reinforce your case if a dispute does occur - and it is simply good customer service, too. Create your policy in as many places as possible and enforce it without exceptions.

Understand how your payment processor and merchant bank views returns, refunds, and calculate their reserves. Most merchant banks require that return and refund policies are made conveniently available to customers to prevent misunderstandings. All merchant banks maintain a chargeback threshold - for instance, if a bank's threshold is 2 percent, it may sever ties with you once your chargebacks reach 2 percent of your sales for a given period. When shopping around for a bank to partner with, take their section on thresholds into consideration. Ask if the bank has a chargeback management staff to aid in customer disputes. Most importantly - especially if you are doing most of your business online - ask whether or not your business would be considered a high-risk merchant account. If so, this would likely necessitate a reserve account being set up in your name, which can in some cases severely inhibit company growth, including funds for marketing, capital investment and cash flow.

Process returns and refunds promptly. Within the supply chain, everyone is affected by customer dissatisfaction, returns and refunds, which can cost two to three times a standard order depending on the product - but merchants are affected the most. The actual return is not the risk, either, but the lack of issuing timely credits that can negatively affect the merchant. The smartest supply chain providers utilize advanced order management systems (OMS) that benefit merchant account relationships by simplifying the return and refund process, preventing chargebacks and maintaining high levels of customer satisfaction. When a customer is unhappy, not only does the merchant run the risk of losing the customer, it runs the risk of losing their merchant account altogether if too many refund requests pile up and are not processed in a timely manner. Streamlining the return and refund process and cutting risk is an essential and attainable goal - one any successful marketer must drive to achieve.

Use each of these customer touch-points as an opportunity to save the sale and build a relationship. It is considerably less expensive to build on an existing customer relationship than acquire a new one; it is also a missed opportunity when you do not transform the return process into a moment for customer satisfaction. Save the sale programs - which can yield as much as a 60-percent recovery rate - run effortlessly with the right OMS in place, which can allow for payment returns, offers and shipping frequencies to be changed quickly and easily to fit the customer's needs. It is also beneficial to offer the customer free shipping, special customer discounts or delayed payments on a case-by-case basis. The opportunity to up-sell and cross-sell during the refund and return process is an important consideration to drive revenue and profits up as well. Following up with an e-mail thanking customers for contacting you with their issue is also a great way to drive sales and continue to build the relationship.

It is generally thought that good customer relationships are built in the beginning - when a customer orders a product of their interest and is satisfied upon delivery - but the truth is this relationship is strengthened when the marketer deals well with issues after the order, and the customer sees how effortless the return process can be. So put forth the energy to make yours as efficient as possible, advertise your policy clearly, train your employees to use these interactions as moments to not only satisfy customers but boost sales, then stand back - and watch your business thrive.

Source: 3PL Worldwide Inc.