Customer Service Case Returns Refunds and Adjustments

Customer Service

CASE

Returns Refunds and Adjustments

The advantage of one retail format or channel relative to another with regard to adjustments, refunds and returns is predicated on the supporting supply chain's agility, efficiency and capacity to respond to rapid changes in demand. It is also predicated on the relative financial contributions of the products sold through one channel over another (Stock, Speh, Shear, 2006). Companies including Amazon.com, Zappos and others have successfully used adjustments, refunds and returns as a means to increase service recovery strategies online, earning a reputation for being very customer-centric and trustworthy as a result (Forbes, 2008). All of these factors determine if one retail format or channel is more effective than others in the use of adjustments, refunds, and returns.

Analysis of Retail Channels: Effects of Adjustments, Refunds and Returns

The entire spectrum of retail sales channels from click & ship, brick-and-mortar, clicks & bricks, pick and take, click & take and all permutations and combinations of these channel structures must do one task exceptionally well: earn and keep customer trust. The greater the distance between customers' expectations and experience by channel, the greater the need for closing this gap through effective adjustment, refund and return strategies. Companies have experimented with full-refund and no-refund strategies as a means to segment their markets and generate higher levels of profitability as a result (Chen, Bell, 2012). The net effect of these strategies has been to re-align the buying habits of customers while also creating a very effective approach to spending on adjustments, refunds and returns where the investment will yield the best return (Chen, Bell, 2012).

Creating a unified strategy of adjustments, refunds and returns also is critically important for defining which areas of a multichannel retailing strategy will get the most and least focus over time. There is a common misconception in this area of multichannel retail strategy planning that service recovery is most need for Internet-based channels, when the converse is actually true (Forbes, 2008). Service recovery, or the ability to regain the trust and loyalty of a customer after a bad experience, is even more critical in off-line, brick-and-mortar-based channels as the interaction is personal, real and tangible (Forbes, 2008). The ability to turn a negative situation around and make a customer delighted and loyal again is often more effective in person; yet Amazon and Zappos show how their policies became a catalyst of trust with partners globally.