Remembering the customer relationship from manufacturing to returns
Good businesses connect with their marketing goals by connecting with people in meaningful ways.
They grow their revenue by expanding the scope and quality of their offerings. There’s a natural alignment, not only between needs and solutions but between messaging and values. In the ideal situation, measurement technologies and initiatives allow for greater precision in that alignment. And investment dollars empower product development, instead of pressurizing the business with unachievable growth expectations. Everything runs smoothly and sincerity is the ignition switch.
But sometimes, a narrow, short-term, and shortsighted business mindset creeps into various practices. This mindset inspires businesses to go for profitability at the expense of consumers, not in the service of them. In some instances, this fallibility is inherent — the business is doing something that simply shouldn’t have been privatized. In other instances, it’s a choice.
For example, a business might look for ways to source lower-cost and lower-quality materials, even though that will ultimately be reflected in dissatisfied online reviews, product returns, and potentially brand distrust. Given the escalating trade wars this year, the impulse for product-makers to cut corners is perhaps understandable. Manufacturing businesses are trying to manage their cash flow in the face of uncertainty and, sometimes, with limited credit options. Manufacturing PMIs just hit three-year lows.
With export orders significantly declining, businesses are looking toward the US-China trade talks, as well as ECB meetings and announcements, for signs of the economic future. And they’re secretly eyeing President Trump’s badgering of the Fed on Twitter. Can 280 characters of all-caps insults lead to sub-zero interest rates? According to the CME Group’s FedWatch tool, market expectations for a September rate cut were set at 91.2 percent and these expectations were somewhat fulfilled when the central bank lowered interest rates to a target range of 1.75 percent to 2 percent.
Presuming that a business does overcome these economic obstacles and takes its product to market, temptations still exist to dishonor the meaningful customer relationship on which good business is premised.
A corporation might do this through planned obsolescence, which does involve some long-term thinking but is nevertheless shortsighted as it erodes brand equity. This conniving strategy is familiar to the tech world. It’s what happens when your older phone model is intentionally slowed down, when a forced upgrade seems to cripple your workflow, or when a cable connector suddenly changes for poorly explained reasons. Italian antitrust authorities have penalized both Apple and Samsung for this sort of thing, though ultimately, it may take greater competition and consumer backlash to effectively deter any recurrences.
It’s also important to remember that consumer happiness is never a guarantee. Sometimes, there’s nothing explicitly wrong with a returned product — there are no artificial limits on usefulness, wonky features, damages, or misrepresentative marketing claims. Sometimes, the constraints of the online shopping experience simply didn’t allow a consumer to get an accurate sense of certain product attributes, though conceivably AR/VR solutions will help to bridge these gaps. By understanding and respecting individual preferences, businesses can identify new opportunities.
A deliberately difficult return process might seem to result in more dollars being kept, but it ignores customer lifetime value. A consumer may never overcome those feelings of disappointment at the product and frustration at the returns process.
Prioritizing the customer relationship
Good businesses prioritize the customer relationship from manufacturing through to returns. And even though sincerity across all these practices matters very deeply, it’s this final point — the return process — that could determine the near future of e-commerce.
This month, Narvar, an intelligent customer engagement platform, released a report titled “The State of Online Returns in 2019: A Global Study.” Over 3,500 online shoppers in five countries shared their thoughts about the burden of returns.
In the US, 13 percent of shoppers declared that they wouldn’t shop with a retailer again based on a negative experience with the returns process. The UK was similar, with a churn rate of 12 percent. Shoppers in all five countries wanted free shipping on their returns and experienced points of friction when seeking return authorizations, printing return labels for packages, and trying to get status updates on their refunds. Shoppers expressed worries about packages getting lost in the mail and refund delays.
If e-commerce retailers can eliminate even some of this friction through innovative solutions and alternative return methods, they may be able to differentiate themselves from Amazon and capture more online sales. Disruption is still possible. Shopify just acquired 6 River Systems, a warehouse automation company, for US$450 million, potentially enabling them to, one day, match the pace and scale of the Jeff Bezos empire.
Ultimately, it is this desire to gain market share that will inspire most companies to invest in customer relationships (from manufacturing to returns), instead of cutting corners. Favorable economic conditions and a level playing field make good business a lot easier.
3 April 2020