BrainTrust Query: Legendary Returns
Commentary by David Dorf, Director of Technology Strategy,
Through a special arrangement, presented here for discussion is an excerpt
from a current article from Insight-Driven Retailing Blog.
people in the retail business have heard the lore of the tire return at Nordstrom.
Even though Nordstrom is a high-end department store that has never sold tires,
they accepted the return in order to please the customer.
Although there were
some odd circumstances, the tale is nevertheless true and serves as an important
example of going the extra mile for the customer.
Another company with an impressive
return policy is Costco. They used to take anything back any time, but in 2007
found it necessary to limit electronics to 90 days.
But I have a story of my
own. My neighbor’s treadmill finally broke after 4-1/2 years of above average
use. He ordered parts to repair it, but when they arrived he found they didn’t
fit. On a whim he explained the situation to Costco, where he originally bought
the treadmill (and still had the receipt), and they offered to refund his money.
Although he subsequently used the refund to buy another treadmill from Costco,
Costco lost money on that deal but retained a very loyal customer.
The NRF estimates
retailers lose about $9.6B yearly from fraudulent returns, so retailers must
find the right balance between customer service and loss prevention. To help,
many are using software that tracks returns so they can detect fraud, limit
abuse, and most importantly — take care of their best customers.
When I recently
went shopping for deck tiles for my patio, I chose to pay a little extra at
Costco for the security of a good return policy. Sometimes the return policy
can actually make the sale.
Discussion Questions: What are the pros and cons of generous return policies
such as Costco’s? Are they more worthwhile as a customer loyalty tool for
retailers such as Nordstrom, L.L. Bean and Costco than others?