Let’s face it – eCommerce Returns are very complex and RMA might not be the sexiest acronym in the world. However, it’s an extremely important part of running a successful eCommerce business and has been a hot topic at Cloud Conversion lately. From our experience, the majority of online retailers prefer to focus on demand generation over developing an effective RMA process, but that can be a mistake and actually cost the company over the long haul. In the world of eCommerce, sellers don’t have the opportunity to build personal relationships with customers, so developing a strong reputation through great customer service helps drive satisfied, repeat customers.
Why Returns Matter
One way to measure customer satisfaction is through the Net Promoter Score (NPS), which asks customers how likely they are to recommend a product or service to a colleague or friend on a scale of 1 to 10. The formula of NPS is the percentage of promoters (a score of 9s and 10s) minus the percentage of detractors (a score of 0 through 6). So, the key to a high NPS score is providing a WOW experience to customers by turning a poor experience into an incredible one that exceeds the customer’s expectations, an effective returns process is important component of a high NPS.
Another important aspect of an RMA process is the visibility into what is being returned, why it’s being returned and how the customer would like to resolve the problem. Imagine an RMA process that shows exactly which products are frequently being returned and for what reasons. This gives retailers the ability to go back to the manufacturer or supplier to see resolve these issues. It allows them to increase the speed of the customer’s replacement, exchange or refund, thus cutting costs and increasing customer satisfaction.
How RMA Affects Policy
When it comes to returns policies, the vast majority of eCommerce companies are on the strict end of the spectrum. However, evidence suggests that increased sales from easing customer fears about online purchasing, along with increased customer loyalty and satisfaction, may make a more lenient returns policy more profitable in the long term. Operating with a lenient policy can be costly if not properly supported, which is where a great RMA process comes in. If properly designed and supported, it’s possible to offer different returns policies for different types of products and/or customers in order to protect customers who are the biggest spenders or the most loyal brand advocates.
Valuable Return Information – In the Trash!
For many companies lacking strong RMA capabilities, it isn’t cost-effective to inspect returned products and collect data. A lenient policy means that they are taking back products without learning anything from the return. They will even junk the returns, no questions asked, no answers found. So while they may be gaining customer loyalty, they are still losing out on the invaluable opportunity to learn how to improve their products and business. The high visibility of information that we foresee coming in the next generation of returns processing will make it cheaper and easier for companies to collect information on, say, which factories produced the majority of the defective items, what problems in shipping or in manufacturing are most prevalent, and other insights which will help the bottom line.
In addition to the valuable information that retailers will get, they’ll also save time and money on processing returns. With non-existent or poor RMA systems, there can be a lag between initiation and determining the final destination of the returned product when an RMA is requested. With a new wave of RMA, a product could be immediately tagged for reconditioning, refurbishing, liquidation, disposal or return-to-vendor and go to the appropriate place for processing.
Room For Improvement
Customers who return items online spend an average of $7.85 and 27 minutes per return, leaving plenty of room for improvement. This is important, because the trend of the past two decades has been a continuously increasing presence of eCommerce, making markets more and more competitive. This means that as prices tend to differ less for a product, the consumer’s experience and relationship with the online retailer become the distinguishing element between competitors. When the opportunity for increased customer satisfaction arises, it’s important to look at how your business is doing. How much room for improvement do you have in your RMA process? What do you see in the future of RMA?
We would love to hear from you!