Product Returns In Retail

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It doesn’t sound like a very interesting problem. Unless of course you are the person responsible for managing this process. What has tipped my interest in this subject is the association with the question of Deliveries and looking at all the elements around a delivery process, and of course other processes that are impacted by your desire to create a great delivery experience.

So what happens when you get this great product to the consumer, and then they decide they don’t really want it any more? Well, they get to return it that’s what.

How often do people return products? Turns out quite a lot. A reasonable sized retailer would have to call up to 100,000 a month to say “Hey, we have your stuff. It’s in the warehouse now. Your account is being credited over the next 3-5 days“. Let’s say that even this short message from a call centre agent would cost you around £1.50. So for an average sized retailer you are now spending £150,000 a month on telling customers “we’ve got the stuff you returned”.

It was with some interest that I then read that in Internet Retailer this week that a new consumer rights directive aimed at changing some elements of returns policy could cost retailers £8.8bn in 2012.

  • Change of mind period increased to 14 days
  • Refunds to be made in under 14 days not 30 days

Returns across the EU currently cost etailers about €5.7bn (£5bn) a year, based on a premise that 90% of retailers are domestic and 10% are cross border in the EU.

I have to say, I knew it was a big problem, but not how big.

And so too where there are large numbers, there is fraud. In the USA would you believe that a figure of around 8% of all returns or 1% of the retailers turnover? Stunning figures here from the National Retail Federation of over $17bn cost of returns and abuse of returns:

“NRF estimates for return fraud dollars are up 45.4% over 2009, while total return dollars are only up 4.5%, meaning that return fraud is increasing at a rate almost 10 times faster than returns as a whole”

VoiceSage is helping a range of retailing organisation communications enable processes that deliver great customer experiences around these questions.

Update On Delivery

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Following the last post on “The Delivery Problem” in Retail environments I was blessed with a number of comments and conversations, so I thought I’d do a quick update.

(1) A Dell Executive alerted me to the fact that certain online retailers enable you to pick a delivery slot yourself and if it’s not one of the more popular times you get your delivery “free of charge”. I am sure that ultimately this smooths out the logistics by reducing “peak requirements” and thus reduces the overall level of resources required.

(2) Tristan Bishop (@KnowledgeBishop) had a similarly themed blog post on the unattributed costs to the customer from waiting.  Tristan goes on to suggest 8 actions that you should undertake in the call center if you are to value the customers time.

(3) I’ve made reference to the Genesys Global Survey of Customer Attitudes Towards Self Service (2010) before, but GetSatisfaction have a great Infographic if you need a slide for a presentation that show “you need to reach out to customers” and “remove long waits” to  “deliver good service”. And it’s worth it.

And Now, for a little bit of CEBP Innovation: Post Denmark enable you to text a keyword to their shortcode and you receive back a unique number which you write on the envelope. Yes, it’s your stamp. (source:  the ever cool Springwise)

From Time To Timing, From Stocks to Flows

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Timing Is Everything

I’ve been reading a number of reports lately on the “problem of waiting” and more specifically what it costs us. Before I go “all internet geek” on this let me say that there are some very real world practical examples of where businesses are built around “not waiting”. It’s called the convenience industry. Indeed when we buy online it’s no mistake that we like the ease of purchase, the thrill of buying, the anticipation of knowing that it will actually be here with us, delivered tomorrow morning. Buying is thus also “a delivery experience”.

For some products like books and entertainment products that are “letter box deliverable”, the “Free Delivery” offer is compelling. It has the benefit of not requiring the recipient to be on-premises to receive and sign for the delivery. Free delivery also removes one of the obstacles to purchase in that a “fixed price” in your shopping cart is more comfortable than an “Additional Shipping and Currency Exchange Charges May Apply” type message. Great marketers know that what we are talking about here is “the customer experience” and sometimes just knowing for sure what you are paying, and when you will get it, “are the experience”.

It thus surprises me that companies (people) don’t look to micro-manage delivery to a greater extent, especially smaller retail companies.

So What Are The Costs of Waiting Times?

A recent report by TOA Technologies Cost of Waiting Survey points to some pretty dramatic “costs of waiting”:

  • 41% of Britons who wait switched or canceled a service because of long wait times, resulting in an average loss of £377.90 per customer per annum.
  • 53% of customers complained to friends about the company, and 16% posted their complaint online. 75% claimed they would recommend a company for an on-time arrival.
  • 17% of Britons have refused to accept or canceled a product because the delivery/service was late.
  • Britons wait on average 4.05 hours for each appointment. They are most dissatisfied with communications and utility companies.
  • 39% have taken a day’s holiday to wait in for a delivery or service appointment.
  • Customers estimated it costs them £457.20 annually in lost time and wages.

I really love that final point: what does this mean to the customer, what are the costs to them, and what are the hidden or “pushed out” costs of waiting?  This is what Umair Haque call’s the potential for “Constructive Advantage“.

Why Are We Waiting and How Do We Feel About That?

Well many of us clearly feel that the people we are buying from just don’t “give a damn about our time”, they make us wait, because they can. Just one hour late and 24% of customers would feel angry, and 27% would phone in (which by the way means that only 3% are phoning in ‘not angry’, yikes). It’s not any different in the call center or in the retail store; just ask yourself how long you would wait on the phone while it rings and no-one answers, would you wait 65 seconds for instance? how many calls are abandoned by the caller before they were picked up by your customer care agent or store assistant (would 13-15% surprise you? Report Here.)

Many reports for the Retailing sector (Snow Valley Retail Delivery Experience Report, 2011) point out that the customer expectation is shifting: Now is the new Norm. Yet many companies are still taking a reactive stance to customer communications. According to the Report:

  • Over 60% of email inquiries are taking more than one day to answer. Nearly 80% of retailers send a dispatch email but surely that should now be 100%? (note: how many customers can pick up their email via mobile?)
  • Use of SMS for pro-active management is still below 5% or 1 in 20 retailers. That is the way of the future: more customer updates, more reassurance, more advice if there is a problem, more visibility.

Availability and Delivery are of course key to “having it now” and this is enabled through supply chain infrastructure. In our experience of working with retailers they “mostly know” when customers are likely to initiate an inbound call, it’s nothing that should surprise you. Customers want to know that their order has been received, that it has been shipped, that’s it’s on its way, that it’s on time, etc. Yet many retailers seem to take the view that “fire and forget” is a good experience? Of course the great retailers are using automated outbound calling to deliver personalised, time sensitive, and dynamically capable updates to their customers.

Not using outbound notification (along with other factors) creates the need whereby customers need to pick up the phone and initiate contact themselves. This leads to higher inbound call volumes because a certain number of these customers are always going to ring in to find out “where their stuff is”.

Give The Customer A Menu of Delivery Options

Most products are available through different suppliers. The question for the customer is often where can I get it with the highest degree of convenience; which way can I literally “get my hands on it” the fastest?

  • Same Day Delivery
  • Next Day Delivery, Guaranteed
  • Delivery To Multiple Addresses
  • Free Delivery
  • Free Delivery When Order Is Above A Certain value
  • Did The Retailer Offer Ability To Add “Specific Instructions”
  • Did The Retailer Offer Gift Wrapping?

So the question I have for you is when was the last time you stood back and thought about the different potential delivery options your current, or future potential customer might value? Are there ways you could create differentiation from competing services that are meaningful to certain customer types?

Looking At Delivery As An Online Offline Experience

One part of this delivery mix is the instore pick up option where you make your choice online but pick up locally instore, yet only 19% of UK retailers offer this option. For those with bricks and mortar presence surely this option is common sense, and an integrated online offline approach is desirable if difficult to implement in reality.

Instore experiences and face to face relationships still matter that’s why your high street retailer (should be) taking such care in this area. Face to face communications with customers and how well they are delivered is a key customer satisfaction driver. If you’ve ever been unfortunate enough to have hired a “rude customer service” person, you know all about the damage that this person has done to your reputation. I wonder what more could be done to create “great experiences” for parcel pick up? I’m pretty sure that by looking at this in detail you would be surprised at the amount of areas where there is room for improvement, like “where is my nearest store“? and “where’s the pick up counter“? etc.

One of the reason’s I like Apple is the Apple stores. They know their products, they have the information I need to get things done, they are friendly. It hardly seems like service at all.

Some Conclusions

Customers value ease of use and convenience. Yet there does not seem to be very much innovation going on in terms of delivering a great delivery experience from the customers perspective. Great retailers know that a delivery promise is a compelling differentiator. Amazon Prime give you a fixed cost ‘all you can eat’ delivery price point, which is fantastic for the Heavy User. Some leading retailers are now offering “1 Hour Delivery Windows’ where they promise you delivery within that time slot. That enables the customer to make some plans around this window, and “save the rest of the day”.

So here are some questions for you with regards making great delivery, a delivery point:

  • What would a one hour delivery window promise mean to your customers? How could it change their “total experience”?
  • Would a certain sub set of your customers be totally wowed by this? i.e. does it mean more to some than to others?
  • Would these subset of customers become more “evangelical” or “vocal” in their support of you by speaking of you to others?

Was this post useful to you at all, did it stimulate any thinking? Why not let me know? You can email me at paul.sweeney@voicesage.com or follow me on twitter at @paulsweeney

Customers, Products, and Feedback Systems

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JP Rangaswami (@jobsworth) Former Chief Scientist at BT, and now Chief Scientist at Salesforce.com posted a link via twitter a few weeks back http://bit.ly/c6XaCZ . It was in relation to a little running, personal exercise management application called Runkeeper. You run, it tracks your route and performance, and you can share that with your friends or compete with others.

It plays on a number of themes I am personally interested in:

(1) Personal Data Loops

The Personal life of Data: with relative ease we can now measure our own performance, track our progress, get suggestions as to how we might improve in ways that were impossible prior to the iphone / android mobile experience. This personal data is radically horizontal in some respects such as your location data and your social graph (Facebook) and your availability to others (Google Calendar, Outlook, or Tungle see this ). But now that “the location” is being tracked could another application not offer you the ability to see how your movement through a city centre affects how much money you spend? Retailers have known this for years, it’s called footfall and there are some pretty big decisions made about where to put retail outlets made on the back of it. But could this data about your location be made useful to you? Well I think we’re about to enter an era where you are about to find that out.

(2) The Game Mechanics That Change Behaviour: so you’ve gone for a run and now you share it on Facebook. Why? because by publicly posting (or setting it to automatic posting) you are signalling to yourself that you better do your best because everyone is going to see it. Basically you are taking what was a private activity and making it social so that your private behaviour is changed. Where decisions are to be made public we alter some of our decisions. Sharing also opens up some competitive dynamics in that we want to do better against ourselves, and competing against others creates a strong motivational incentive.

(3) Sensing to Create Data About Our Behaviour: so you’ve heard about the Sleep Cycle App? It’s an iphone application. You put the iphone on your bed and it measures your tossing and turning during the night and its makes a map of your sleep including R.E.M cycles. Pretty useful if you want to find out if you are getting enough sleep or to locate environmental reasons as to why your sleep is being broken. I was speaking to a technical guy and he and his wife both measured their sleep cycles to see “who got the best nights rest”. The one with the best nights rest got the job of driving the kids to school. Maybe that’s a reverse incentive at work there, but it illustrates that data often wants to be social, and people will create competitive dynamics to drive personal or collective goals. As the ‘raw data” about ourselves and our behaviour becomes available it will become used in ways that we probably don’t appreciate at the moment.

(4) Product Centric Data Versus Customer Centric Data

So the Runkeeper guys have a great little application that is not tied to any device, that is inherently social, that is linked to the other great platforms of our day. It has built up a strong community around the application of people that want to connect, compete, share. So they should be terrified of a new application from Nike, Adidas, and other footwear specialists right? Well the big marketing spend by Nike et al actually drove up sales for RunKeeper because it grew the overall market. But in the long term the “family of devices” approach will lock RunKeeper out, right? i.e. Sensors in Shoes, bio sensing wrist strap, etc. that all “just work” because they are from the same family, right? I am reminded of a business case from 20 years ago called the All in One Media Center: it had TV, Video, Radio, all in one. It was cheaper than buying all three separate, saved space, looked great. But people didn’t want an all in one because if anything at all broke down they were without any entertainment system at all. I’d also speculate that the mother might want to bring the radio into the kitchen for company as she completed the after diner clean up (something my own mother did), or the teenager wanted to bring the cassette recorder up to their bedroom to play some music or make a mix tape (something I did). It was a failure in understanding the ‘product in use’, the job the product does for the customer, and the social use of the product. The All In One was Product Centric Thinking.

I am guessing that the “customer lock” of the device based approach of the Apple/ Nike/ Adidas is actually a “design around inter-operability issue”. If working standards were in place any device would connect and share with any other device. As Apple say “we do the integration so you don’t have to”. So as long as this integration stuff is hard to do, or inconvenient to do, pre-integrated offers will still be attractive to some.

What Job Can The Data Do – Can Data be Product Centric ?

So it got me thinking. Are the devices “doing a deep enough job” for the customer to warrant being a “closed system”? There is (to the best of my knowledge) data equivalence between the Nike-Apple closed system and the RunKeeper system. Having the shoe as a closed element just isn’t doing enough “customer work” to justify the lock down. The product isn’t differentiated enough, and the customer experience isn’t inherently enhanced because nothing extra is baked-in. A more customer centred view of data sensing, sharing, and utility may have produced different service directions. Let’s ask a very simple question:

Why Do People Run? What Job Does Running Do ?

I haven’t done the research on this yet, but I am going to speculate that people run for a variety of reasons: decrease weight, decrease health issues, increase energy. I think of these as a desire to ‘take responsibility for our health’. Then there are reasons related to “feeling better”, “feeling healthier”, “feeling connected to ourselves”, which I think of as self identity issues, and ‘taking responsibility for our emotional state’. Motivations relating to feelings of socially located identity, or aspirational identity are probably also in the mix (I am the type of person who runs 5 miles in the morning, high energy, an achiever, who values balance and drives a Prius). I am also going to guess that some people run in order to get out of another environment (work, home) and create some personal space, away from the chatter of others. So running might do a “number of jobs” for me.

If Nike thought about their devices (shoes, bands, watches, clothes) in terms of Added-Health then why doesn’t it sense the weight distributions of your body as you run in different terrains and make assessments for you? You are literally standing in your shoes yet it doesn’t take basis weight measures? Do your shoes help you manage your stride length or adjust your stride for maximum overall goal attainment? What are those shoes doing that intrinsically provides unique personal data that can only be captured in that closed system deployment? And isn’t most of this data probably attainable with an intelligent insole, as opposed to an intelligent shoe? Why didn’t Nike create an insole that would work for any shoe? Because they weren’t really customer centric they were product centric.

Am I running in the morning? Did I get enough sleep for a good run? should I recalibrate my objectives for this run based on my sleep cycle? What other personal data can be collected that helps me make better decisions? What is the life of the customer that can be enhanced with better design, better experience delivery? What is the wider context of my life that these new data streams can help me with?

What Nike did well was to understand that the mechanism of competition could be deployed through a virtual race without destroying the benefits of running alone (you time, reflection time, connection to yourself time). They socially augmented the private experience. What they haven’t done is expand the concept of the product through the concept of “product as service” or “product as end result of a customer collaboration”.

Feedback Loops – Sensing, Data, Behavioural

A lot of this talk about personal data, and data about the physical context of our personal lives, and its social context is about providing the sensing necessary to create the opportunity for feedback loops. Without feedback loops that are close to the ‘event”, timely and accurate, we are not afforded the opportunity to re-steer our course. We are less Agile. Tighter loops are more effective at correcting courses. The problem with behaviour is that sometimes the effect is not obvious, immediate, or certain. If you take up smoking today, you may not feel ill for a whole bunch of years, or ever. And since you’ve never been old before, you have no idea what the affect could look like in the future.

As companies and organisations we should be constantly looking for the opportunity to create feedback loops. Most companies think of this as including website feedback mechanisms, commenting, and official customer surveying. Those to do with on-site navigation and customer journey’s are probably the most top-of-mind.

These are Voice of the Customer (VOC) initiatives and to do it well requires some skill. One of the best I know is Scott Rogers (http://www.linkedin.com/pub/scott-rogers/0/20/31b) most recently head of Strategic Planning at Dave’s Bridal, a major US Retail Chain. In some recent posts  for the Accidental SCRM (@ac_scrm) Scott was making the points that (a) customers value their time at three times their actual hourly pay rate, so you really do need to make it feel that it was worth their while taking the time to feedback; (b) you need to drive the customer experience metrics, not just customer satisfaction metrics; (c) you need to drive insights into why people have certain beliefs, reactions, experiences etc. as only then can you create appropriate sets of actions. When you are at scale, like at a large scale internet retailer, generating an active Voice Of the Customer strategy is a key customer feedback loop, but you most follow it through with serious analytics, capable of working on unstructured data, and then worked on by a a thoughtful analyst.

Just as a person might smoke and not think of the lung cancer, a retailer might offer product on credit to those that can’t pay/ won’t pay, or at risk of not paying. Often a sales person gets their commission calculated on the sale, not on the money collected. In effect there is a missing feedback loop between sales and the credit function. Indeed we have seen the macro effect of this in the mortgage and real estate crises.

Thinking About Feedback Loops Between The Enterprise, The Customer, and the Not- Yet-A-Customer.

The new data streams from personal data, social data, and specific data relating to the customer-enterprise relationship will be key elements in creating these feedback loops but to entice participation in the feedback you have to start start thinking a bit more about exactly how this helps your customers life, and not how much it populates your CRM system with more data to sweat.

You need to think of Architectures of Participation more than Architectures of Perspiration.

Getting to Intelligent CEBP

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Recently, I have had the experience of serving as the voice of professional wisdom in a few business conversations. Being half way through my fourth decade I don’t feel like the wise old owl yet.  However, given the pace of change in  web technologies over the past 15 years just being able to remember my conversations with industry clients describing why a business would need an internet connection or website provides a helpful perspective.

Who would have thought that dial-up would lead to broadband which would not only transform the media industries, but would radically disrupt the enterprise software business, the communications vendors, and the retail industry. Would we have guessed that broadband would lead to a boom in home working, in the independent professional, in the global outsourcing industry, in the very nature of ‘work’.

The CEBP  ( Communications Enabled Business Process) industry segment where VoiceSage has been one of the leaders was only beginning to be defined between 5-7 years ago. At the same time the UC (Unified Communications) industry received a lot of attention from technology industry heavyweights with big investments being rolled into UC style product offerings.

The CEBP space has not received the benefit or curse of being sponsored by industry heavyweights.  More than two years ago, I wrote a blog about the UC industry challenges that touched on similar  ideas to this UC won’t last post that has been receiving a lot of attention recently. Nothing much has changed. There has always been a CEBP versus UC analyst driven debate. From the start, the one agreed upon difference was that UC primarily focused on improving an enterprise’s internal communications between staff while CEBP was primarily focused externally on communicating with customers.

The fantastic perspective that one gains by being hyper focused on a unique niche like CEBP is being able to see many of the vague predictions around customer communication models evolve and see these product and service iterations come to life. Some examples:

(1)  Once hard to develop telco-style services are now quickly trialed, deployed, and scaled through web services.

(2) The “long tail” of business process challenges can be affordably solved. Customized solutions are available to meet the unique needs of any type of business. It is no longer a one size fits all world of communications services.

(3)  The enterprise developer and business analyst  have been empowered with platforms and services that require little or no technical skills that real people can manage on their own.

While the UC industry has gotten stuck in the muck trying to move from product features to customer benefits CEBP has been focused on proving customer ROI.

The VoiceSage mantra has always been that we move our customers’ business metrics. CEBP has never required vague UC style arguments about subtle levels of efficiency improvement. Our daily customer conversations are always focused on business metrics that are measurable and valued.

Within the CEBP industry a second debate was how the growth of API or user defined platforms could potentially drive real innovation. The good news is that APIs and developer driven ‘hacking’ of communication platforms have pushed fantastic innovations globally across lots of industries. But the truth of the matter is the average customer is not a coder.  Providing an innovative  development platform to 30 enterprise developers in a company still does not help the 30,000 enterprise line of business managers who need to solve a business challenge this week on their own.  Web based applications now provide these managers an opportunity to solve their own challenges and SaaS based solutions have become IT approved.

One early prediction that has failed thus far was that traditional telcos would use these new platforms and  CEBP services  to leverage their own operator assets driving internal business process improvements as well as innovative new services  for customers.  The desire by telcos to be more than dumb pipe providers was thought to be enough motivation.

If Telcos are going to move beyond commoditized service delivery, time is rapidly running out. We can already see the upstart competitors like Google, Apple, Facebook, Skype, plus the myriad of payment vendors,location applications, and cablecos picking off traditional telco assets one by one.  In the US, many say the battle for the consumer market has already been lost by the incumbent Telcos. Will Telcos be able to hold on to the enterprise market?

At VoiceSage we have taken a rapid iteration and development approach that enabled us to incorporate over 180 independent and distinct functionalities into the platform just last year. Some of them you will notice, others you will just feel. Yet, the truly important product and platform advancements are just beginning.

Successful CEBP platforms like VoiceSage are now achieving a level of deep industry insight combined with significant scale. This synergy of vertical experience and sheer volume of consumer interactions can now be leveraged into proprietary types of business intelligence.

VoiceSage, in similar fashion to other web platforms, benefits from the network or community effect. The VoiceSage platform and new product offerings have become more valuable and more intelligent due to the hundreds of millions of consumer interactions across many business verticals. Launching an intelligence engine as the next iteration of the VoiceSage product offering is the logical evolution.

Focusing on customer ROI, empowering user driven innovation, and creating added value through business intelligence engines were the trifecta of thought leadership visions for the CEBP industry when it began.  Few industry players have been able to evolve, sustain, and grow to achieve this current  level of product maturity.  Fortunately, VoiceSage has been in a position to help CEBP grow up.