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Business Suicide Strategy #8 Not Having a Risk Reversal Or Guarantee in Place – Part II
A quick recap of the key points from Part I of Business Suicide Strategy #8 involving risk reversal and guarantees includes the following: We discussed how this one strategy can dramatically change your business profits. Unfortunately too many businesses are afraid to offer risk reversal strategies because they fail to understand its significance: namely that the benefit of any product or services is gained after the sale is made. If you lower or eliminate this risk, then the natural consequence is people will be more inclined to buy. We compared and contrasted two hypothetical approaches in how a business person might handle selling a puppy to a father.
Now let’s study 7 policies of Nordstrom’s return of store merchandise. Nordstrom, a high-end retail store, truly understands the value of offering ‘risk reversal strategies’. Nordstrom’s online return policy reads as follows: “Nordstrom’s Pledge to its customers:”
1. “Our commitment to an extraordinary shopping experience” (Nordstrom uses this slogan as its tag line.) While we may enjoy shopping, any time a business separates a customer from their money there involves a trust factor between the merchant and the customer.
2. “Even if you’re making an exchange or a return, we make it easy.”
Here Nordstrom is giving the customer permission to return the purchase. While Nordstrom would certainly prefer that you make an exchange instead of request a refund, they have already given you to permission to return the item.
I am surprised at how many stores only offer an exchange for other products in their store. By such a policy that business is saying to the prospect or customer the money you spend with us will not be returned under any circumstances. This is not a good policy because the customer cannot experience the product without a sense of fear that they are assuming a huge risk depending upon the price point. If you refuse to give anything other than store credit your business will lose sales as a result. Ask yourself can your business in these economic times afford to take such risk?
3. “A prepaid RETURN LABEL is included with every order. Only the minimum return postage fee will be deducted from your return. And exchanges are totally free – by mail, by phone or in the store.”
Nordstrom includes a prepaid return label; one less hassle the customer needs to address in doing business with Nordstrom. Look carefully at this language. The customer is automatically put at ease.
4. “Exchange postage is always free! Fill out the exchange portion of your RETURN LABEL and drop your exchange in the mail. We’ll send in-stock items right away, charge your credit card and credit the return once we’ve received it in our facilities. Unfortunately, we cannot refund your original shipping charges. No worries, insurance is taken care of when using the provided label.”
The consumer is informed upfront that exchange postage is always free. How many businesses do you know that offer such a convenient policy? Nordstrom apologizes it has to charge you for returned items but remember if you return the item to the store there is no charge. Also Nordstrom automatically provides insurance for returned items.
5. “Skip the exchange portion of the RETURN LABEL and simply call us at 1-800-933-3365. We’ll send items in stock right away, charge your credit card and credit the return once we’ve received it in our facilities. Unfortunately, we cannot refund your original shipping charges. EASY MERCHANDISE RETURNS” if you ordered the wrong size no problem we will promptly send you the in stock items at no cost.
Now Nordstrom has taken away the fear of how to handle “What if the garment doesn’t fit?” Now what? The easier the business makes it to do business with them the more sales that business will make.
6. “Mail your item(s) using the prepaid RETURN LABEL. We will simply deduct a flat fee of $6.00 from your order refund for return postage. Just leave your package in a secure place where you normally receive your mail or drop it off at any U.S. Mailbox or Post Office. No worries, insurance is taken care of when using the provided label. Unfortunately, we cannot refund your original shipping charges. If you choose to return the item in your own packaging using another shipping method, please be sure to use the address listed on our RETURN LABEL: 7700 18th St. SW, Cedar Rapids, IA 52404. If you do not use the prepaid label, the $6.00 fee will not be deducted from your return. You’ll receive a confirmation e-mail once the package has arrived at our facilities.”
Nordstorm takes the guess work out of what shipping and handling charges will be by using a flat fee for all returns. What a powerful strategy to eliminate the guess work out of future shipping and handling charges. And Nordstrom even apologizes for their $6.00 policy but explains why the charge is necessary. When was the last time a store apologized for a charge you incurred for doing business with them?
7. “In Store – FREE Simply bring the packing slip and credit card used when you placed the order to any one of our stores. Click here to find your nearest Nordstrom store.”
Here Nordstrom puts no time limits on the return date and by doing so Nordstrom’s builds exceptional customer loyalty. Nordstrom allows you to return the merchandise to any store and gives you a store locator link to find the closest store to you. By doing so Nordstrom is valuing your time and doing everything to make the shopping experience pleasurable and in fact memorable as well.
The company that reverses the risk, automatically gains a competitive advantage and wins more business. This competitive advantage is very significant when attracting new clients or customers to your business. In fact the longer you extend the warranty or return policy the less returns you’ll have over the course of your business. Such customer service builds brand loyalty.
Nordstrom differentiates itself from 98% of the retail stores by offering such a lenient return policy that their buyers spend more money and enjoy the shopping experience. There will always be a few customers who take advantage of the Nordstrom policy.
This is absolutely critical to the success of your business. The longer you extend the return policy the less pressure the buyer feels to act quickly to return the item so no sense of urgency is instilled on the customer which is exactly what your business wants if you have a good product. The longer the customer utilizes the product the more likely the customer is to keep the product.
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