Returns Management and Your Bottom Line

Consider the impact returns have on your customers. First, they have to spend their time and energy to bring the product back to the store. Then, if the item is not in stock or has to be ordered, they will have to come back again or wait for the item to be shipped. All this is aggravating to the consumer and could cause the loss of one or more customers, if the return is not handled properly. In today’s social networking world, one unhappy customer could have could have a major effect on new sales revenue!

Returns Management

Other costs of returns include:

  • Costs to process returns
  • Cost of replacement or refund to consumer
  • Transportation costs to bring in replacement items
  • Warehouse space and stocking costs
  • Labor costs for sorting, triaging and determining warranty status
  • Costs incurred to return to the manufacturer or distribution center

These negative impacts to both customers and company bottom lines can be avoided and actually turned into profits with the right returns management strategy.

What is Returns Management?

In a nutshell, returns management is how you control the processing of returns in order to find the “hidden profits” by recapturing and maximizing the value in returned products. It also means that an effective policy must be put into place from the point the customer service department is in contact with the consumer all the way through the returns chain process – shipping, receiving, warehousing, sorting, triaging, return for warranty credit, repair refurbish, remarket, recycle, or disposal.

An effective returns management programcan build a stronger relationship with your customers and provide additional revenue to your company by recovering value from returned goods. Companies can increase their earnings by as much as 5% of total sales with a good returns management program. An astounding 80% of all returns have no defects and can be refurbished, and remarketed.  In addition, the 20% of products returned defective can be repaired / refurbished and returned to stock as sellable A and B stock. There are multiple secondary market channels available for gaining profits from returned goods

If your company does not have a policy for returns management you are losing a great deal of money, and in these economic times could possibly be a make-it-or-break-it benchmark for your company.

If you do have a policy, how good are you keeping track of results? According to reverse logistics expert, Curtis Greve of Greve-Davis, “If you can’t track it you can’t manage it.”  An effective returns management program can improve your company’s bottom line, as well as your customer relations. Can you afford NOT to have one?

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