With companies like LL Bean getting rid of their unlimited returns policies, and fraudulent product returns costing retailers billions of dollars a year, today we look a real-world research study that shows how organizations can turn returns into a profitable and positive experience instead of just an upsetting drag on revenues. Tema Frank interviews Dr. Necati Ertekin, Assistant Professor at Santa Clara University’s Leavey School of Business. There are important lessons for retailers in his recent paper, Immediate & Long Term Benefits of In Store Return Experience.

Dr. Ertekin notes that because we see returns as an unpleasant cost of doing business many retailers have their most inexperienced staff handling them. That’s a big mistake!

In most cases, the best a customer can hope for from such staff is that they’ll take your return without arguing with you. In a worst-case scenario, they’ll try to pressure you into replacing the return with something that doesn’t meet your needs any better.

Not surprising, says Dr. Ertekin, when you think about the incentives at play here. Most retail staff are paid on commission. If you return a product, they lose their commission. If they persuade you to exchange it, they can keep their earnings.

But for the retailer, that’s not the best option.

Pressuring a Customer is Bad

What the study showed was that if salespeople pressure a customer into exchanging a product instead of returning it, the customer is unlikely to come back and buy from you again. It leaves them feeling bad about your company.

Listening to a Customer is Good

But a skillful salesperson recognizes that when you are returning a product there’s a chance for them to better understand your needs. What was it about the first product that didn’t work for you?

If customers feel that the salesperson actually has their best interests at heart, there’s a good chance they will exchange the product, and often even upgrade to a more expensive one.

Competent Salespeople Turn Returns into Future Sales Too

In this study, they not only looked at the short term, they also looked to see what happened with customer loyalty afterwards.

Turns out that if the customer felt genuinely listened to and helped by the salesperson, whether or not they exchanged the return at the time, they were more likely to come back and buy from the retailer again. So there’s a long-term benefit as well as a short term one.

Retailers Must Change Their Training & Compensation Structures

As long as sales staff have only short term commission-based incentives that reward them for converting returns into exchanges, they’ll keep on pressuring customers.

And those customers will feel unhappy with the experience, so they won’t come back. The retailer suffers in the long-term.

So to change the situation two things are needed:

* Sales staff need better training. They need to become more skilled at empathizing and uncovering the true customer needs. That, combined with good product knowledge, will help them find a product that really is better for the customer, and leave the customer feeling happy instead of pressured.

* Compensation can’t be just on short-term sales figures. Customer satisfaction has to be brought into the formula when calculating sales staff pay.