Wednesday, December 06, 2006

Marketing in Reverse: Handling Returns

Marketers promote products, and sales professionals sell them. Understandably, both groups focus on a one-way flow of products -- out the door and into the hands of customers. Little thought is given to the messy problem of products coming back in the door through returns; that's an operations problem. But while marketing generally isn't, and shouldn't be, in charge of the reverse logistics process, it definitely needs to be involved.

First, returns are a big issue. According to Forbes, "up to 7% of an enterprise’s gross sales are captured by return costs," amounting to a staggering $100 billion per year in the U.S. alone. Return rates vary by product and type of retailer/distributor, from about 5% in consumer electronics, to 15% on average for computer manufacturers, and up to 30% for book publishers.

Second, proper returns handling is important to marketers. As Multichannel Merchant magazine points out in this article, "handling merchandise returns is an important customer touchpoint. Customers who have positive return experiences are the most loyal buyers, as they'll reorder confident that any potential challenges will quickly be resolved."

Your organization may choose to manage the returns process internally using software from a vendor such as Manhattan Associates, ClearOrbit or Sterling Commerce, or outsource the function to a reverse logisitics specialist. Firms offering reverse logistics outsourcing services range from third-party logistics providers like Roadway and UPS to supply chain management outsourcers such as Zomax, Arvato or Inoveris.

If your organization needs help determining the best approach to handling returns management, you may want the services of a consulting firm that understands both operations and marketing, such as Kelly Allan Associates.

But whether done internally or externally, proper returns management is critical both to improving profitability and retaining customers. Sometimes it pays to think backwards.

*****

Terms: reverse logistics management, RMA, returns handing, return rates by industry, ClearOrbit

The Internet marketing advertising portal: WebMarketCentral.com

Contact Tom Pick: tomATwebmarketcentral.com

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