Data only gets you so far. These steps, used by transformational retailers, outlines how to take data and drive decisions to correct return issues.
Psychologically, we tend to manage and work within our problems instead of addressing the source, especially when we've never had to do it before. We tend to "deal" with problems until, at some point, the situation has become so big or so frustrating that we can no longer ignore it.
Returns are a problem that has been consistently pushed aside and managed. All the reporting can be there:
- NRF reported that US returns reached $861 billion
- More than 9.6 billion pounds of returned goods are thrown into landfills, more than doubling since 2016.
- And it takes the sale of 2 more items to cover the cost of returning one.
Despite these shocking statistics, most brush them aside. "What are you going to do about it?" At some point, it's easier to focus on correcting the inventory flooding back in rather than dealing with the core issues.
And that's the crux for many retailers. Even those gathering insights into what is happening in their business and why customers are returning, how do you turn those insights into action?
Be Proactive & Find a Friend
Whether you're an executive, a senior manager, or an analyst, you need to find someone who wants to use insights to prevent returns. Return reasons and actions cross the responsibilities of different departments, so you need to build a collaborative relationship. Starting with an executive mandate can help, but the most successful projects are when people want to make the change.
Timing is Everything
The faster you find the problem, the more likely you can correct it, and the more impact it will have. Suppose you find the reason for returns two weeks after an item begins selling. In that case, the impact of the correctable action will be much more significant than if you found it mid-season or after the season. The graph below gives a representation of the effect that this timing has.
Go for Wins to Build Momentum
You can't do it all, so what can you do? Find the outliers which will drive wins in your organization. For some people, that means addressing issues with the most significant payback. For others, it's the ones that can be accomplished the fastest. There isn't the exact for everybody; it's based on your organization.
But for guidance, many will pick a few categories with the highest opportunity or the most energic and supportive team to ensure you can learn and build momentum while simultaneously proving ROI to the executive team. You want to fix the anomalies in-season first to drive immediate value to fund longer transitions, such as vendor compliance, policy changes, or changes to the product for the next season.
Track Your Success and Uncover Opportunities
You need to find a way to measure your success by tracking both the benefits from action and the lost opportunity from inaction. It's a great story to show how you avoided $5 million in 3 months. But it's even more powerful, when building momentum, to demonstrate that there was another $10 million opportunity that wasn't taken.
Evangelize Your Stories
We are storytellers – and we remember how things affect us. Continuously capture and share your success, failures, challenges, and triumphs. It's paramount when transforming or implementing a new capability as people gravitate towards and repeat anecdotal information such as:
- How you avoided returns by changing a single word on a web copy
- How you worked with the supply chain to find negligent carriers
- Or how you identified vendors who weren't living up to their promises.
We're retailers at heart, and we thirst for memorable retail stories.
An Insight Story
"Hey, I found that customers don't like the quality of our knit sweaters, which is why they were returning them."
An Action Story
"By listening to our customers, we discovered that a vendor was producing a product that fell apart after being washed. We immediately got in front of that issue, pulled the product off the shelf, and contacted every customer who bought it to inform them of the defect. We offered them a refund or a new promotional offer to support our brand promise.
We then went to the vendor to demand compensation for the quality issue. Now, this vendor was an "A" vendor, but for this category of merchandise, they didn't perform. We weren't happy about having the poor quality. Still, we rectified it before and limited the fallout. But what made us feel great was that we got fantastic customer feedback about how happy they were on how we handled the situation."
Leverage AI and Collaborative Tools
To turn insights into action and avoid returns in the first place, you need the following:
- Knowledge of why customers return – the actual root cause
- That information early in-season
- The ability to collaborate seamlessly across teams
- Success measurement
Given the number of SKUs, locations, customers, purchases, and touches on an item, AI and machine learning must be incorporated into a collaborative tool. You can't wait weeks after the sale to find issues; you must start predicting possible returns immediately.
Whenever a problem arises, such as a web copy, you don't want to think about all the people and steps you need to take every time. It's a waste of energy and wrought with inconsistencies. It would be best to have a checklist to visualize and ensure you resolve it, along with the ability to log communication and resolution directly to the issue. You can't do all this quickly and consistently with BI reports, spreadsheets, and email.
Returns aren't going away anytime soon, and while many retailers are focused on managing the overwhelming volumes, forward-thinking retailers have already taken another crank of customer centricity by listening to the voice of the customer during returns and making the necessary product and process adjustments - all before the next customer buys and receives their purchases.