May 05, 2009

Customer Returns: Catalogers Can Save Money Here Too!

Customers who return merchandise are an enigma. Some like to thwart returns policies. Some just don't like the merchandise. Some need money. Some feel ripped off due to shoddy quality or style issues.

It has been my experience that customers with consistent returns behavior tend to have predictable returns behavior in the future.

A simple rule-of-thumb is this: If the customer has placed three or more orders, and has returned more than 2/3 of his/her merchandise, the customer should not be marketed to. In other words, stop mailing catalogs to this customer, and stop sending e-mail marketing campaigns to this customer.

This isn't 1994, mind you. The customer can still order from your website. But why waste marketing resources on a customer that is going to cost your business profit?

In fact, if you want to really see if orders happen organically, this is a low-risk audience to "do a test", if you will. Just stop mailing catalogs and stop sending e-mail campaigns, and see if the customer continues to purchase. If the customer continues to purchase, those catalogs and e-mail marketing campaigns are probably not driving the volume we think they're driving.