News & Articles


How crucial are returns policies to CRM?

by Ernan Roman
Founder and principal, Ernan Roman Direct Marketing,
Author, and regular guest on ABC TV

Who in the world would argue against a strong return policy? It should be central to a company's marketing plan, particularly when the product has added value for the consumer and is a planned or researched purchase.

When a customer has to return a product, the brand is displaying how customer-friendly it is. This is where the rubber hits the road. How much does your company take the customer experience into account? In today's market, the customer is expecting to be mistreated. A return policy answers the question, “how good is a company at giving money back to a customer?”

We find over and over again that the post-sale experience for products is a make-or-break element in terms of re­peat purchases. Brands that build expec­tations have a responsibility to maintain that expectation of good service.

This is particularly the case in today's multichannel market. Direct marketers using mail, catalog and Web face the challenge of being “distant” retailers. A strong returns policy and building an added layer of insurance to the buying experience that one can see and touch.

However, there are those who might argue that no-questions-asked policies might run the risk of consumer abuse. I suggest monitoring the use of your returns policy and auditing it regularly. A returns policy should not be a blank check, but not having one could be more devastating than losing money through fraudulent claims.

If a company is smart enough to deliver customer service, it is not only retaining the customer, it also gains advocates and ambassadors.

The Decision

Rumbauskas offers a by-the-numbers case study that may work for him, but his argument doesn't take into account customer equity. Roman gets at the heart of good CRM when he says that a company is not only gaining a sale but also potential word-of-mouth advocates. His argument is well-received in the current climate, where shoppers complain loudly and publicly about strict return policies.

From the January 07, 2008 Issue of DMNews

New Book Release: Voice Of The Customer Marketing
"This is the definitive playbook for this new customer-driven era."
—Frank Eliason
Senior Director, National Customer Operations, Comcast
"Thank you, Ernan, for tuning us in to the inner voice of our customers! A deep understanding of our customers' needs and preferences is essential for our future growth."
—Karen Galley
President, Patient News Publishing