Product Returns: A growth industry part 2

In the final part of this two-part series (read part one here) examining the value of convenient and cost-effective return policies, this week I examine how in-house quality control, product exchanges and catalog circulation can affect your company’s return practices.

Quality Control=Less Returns!

It’s vital to maintain strict quality control in your fulfillment center. If you have a high rate of people returning products because they received the wrong items, you likely have an internal quality control issue. Make sure your shipping personnel packs orders in an appealing way. Remember, you never get a second chance at a first impression. If your customer opens his or her package and the items are improperly or sloppily packed, it reflects poorly on your company and can increase return rates.

Don’t Accept Returns (When You Can Accept Exchanges)

There are many items that needlessly get returned. Having spent much time in the fashion industry, where 30-plus percent return rates are the norm, I learned firsthand that fit and color are among the top reasons for product returns. Train your customer service reps (CSRs) in the art of turning returns into exchanges. Often this can be accomplished by simply having the CSR offer an exchange. For example, the communication can be as simple as the following: “Ms. Jones, would you like us to ship you the item in a different size, color, etc.?”

Another technique is to have your CSRs use their cross-selling skills. Have them engage the customer as follows: “By the way Ms. Jones, many of the people who ordered item X also ordered item Y. Would you like us to send you that one instead?”

Some companies even pay for the inbound and outbound shipping on an exchange situation — another way of reducing the risk and “saving” the order. If you do this, however, make sure your CSRs aren’t too aggressive in offering upsell and cross-sell items on the original order. Monitor returns on both the aggregate and individual CSR level.

Circulation Planning and Returns:

Many multichannel marketers have a housefile segment of customers who’ve purchased once and returned the product. In your database, they’re “zero dollar, zero frequency” customers. I’ve mailed this segment for a number of mailers and been profitable. You may want to test this segment, as well. You’ll likely see a higher return rate from this segment as some people chronically buy and return product.

But when you test, you may find that despite the higher return rates, enough product stays in the customers’ hands to meet your profit expectation. This segment needs to be in line with your list rental goals. Keep in mind, the higher return rate is offset by the fact that there’s no list rental fee.

Do you have better ways to reduce returns in your organization? Let me know by contacting me at the e-mail address below or posting a comment on this site by clicking on the “Post a comment” icon below.

For part 1 of this series click here


Jim Gilbert is president of Gilbert Direct Marketing, a full-service catalog and direct marketing agency. His LinkedIn profile can be viewed at or you can post a comment here or e-mail him at

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