How Product Returns Can Be the Difference between Profit & Loss


According to Gartner, product returns are on the rise, and the costs are often hidden making it difficult to address their true financial impact. You have to not only refund the customer but also pay to repack, restock, and resell the returned product(s). There is an upside to product returns that are managed correctly, however; customers who have a positive returns experience often make repeat purchases, and they are more likely to refer that retailer. That is why it is so important to identify return patterns, learn how to convert returns to future sales, and turn every RMA into a sales opportunity.

Turning RMAs into Sales Opportunities

Every company has an optimal rate of returns. In fact, product returns are very healthy for a business, helping to ascertain potential issues and ensure enough sales are coming through the pipeline. Ideally, your job as a company is to turn each of those RMAs into a sales opportunity. This is done through proper management of product returns. By simplifying the returns process for your company and customers, you can build brand loyalty and encourage repeat purchases from customers who have made a return. Some great techniques for turning RMAs into new sales are providing a customer portal for easy product returns, sending automated emails suggesting related products that may be a better match, or offering special discounts to encourage “lost” customers to try your product(s) again.

Improving Customer Service with Product Returns

Companies that see product returns as an opportunity to improve customer service are much more likely to operate at a profit than a loss. Customers are much more likely to purchase from companies that take the guilt and fear out of the purchase and returns process and replace it with peace of mind. Here are some ways to improve customer service with every product return:

  • Set up custom alerts for all product return requests to expedite the process
  • Automate customer emails to improve the transparency of refund/return statuses
  • Offer a prepaid shipping label to keep customers happy and ensure timely delivery

Identifying Product Return Patterns & Trends to Increase Profits

Researching and analyzing return patterns and trends will not only improve inventory management and customer satisfaction but also help to increase profits. Knowing specific customer motivators and understanding customer behaviors can lead to better forecasting of returns and improve aspects of the purchase process or the products themselves. A recent article from addressed one company’s mission to become profitable simply by reducing their product returns by 10%. If they are able to do so, they will be the first company in their region to run a profitable e-commerce business. Their plan is to “find ways to generate sales…which result in less returns,” which is centered on the identification of any patterns and trends associated with product returns.

The Bottom Line

Returns are a great indicator of company health and have a significant impact on the overall growth and financial stability of a business, and companies with a well-executed returns process are more likely to become (or remain) profitable than those without.

See how SupportSync helps you handle returns better!

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