UPS Reduces the Hassle Factor and Increases Its Customers’ Profitability

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73% of people say they are less likely to buy in the future from and online retailer where the returns process is a hassle.,
This statistic was reported UPS and Forrester Research at the Online Marketing Conference in San Francisco yesterday.
While this might seem obvious when one places themselves in the role of a customer, it counterintuitive to many eRetailers. Most would like to reduce the number of returns because they see them as a profit drain. They lose the sale and it costs money to carry out the process.
This logic seems to make economic sense. However, it does not appear to make psycho-economic sense. Usability studies say that if you make the buying experience easy for the customer you will increase sales. Customers don’t like the confusion and frustration that comes with a site that makes it difficult for them to get the information they want. Now this study suggests that customers consider confusion, frustration and hassle in a broader context. Most online shoppers have experienced a need or desire to return a product and found that the hassle reduced the perceived benefits of buying online.
Netflix’s business model is built on this premise. You order your DVD rental online and when you want to return it, you use a prepaid, preaddressed envelope and drop it in the mail. Some wonder how Zappos became so successful selling shoes online. Most people like to try on shoes first. Zappos easy and hassle-free return policy reduces this concern. The attitude becomes, I can reap all the benefits of shopping online from home, have the shoes delivered to me and still try them on without the hassle factor penalty.
The bottom-line is that psycho-economics trumps traditional transactional economics when it comes to the customer experience and the customer experience relates directly to repeat business, loyalty and advocacy.
The suspicious mind could say that when this kind of data is reported by a shipping company like UPS it is tinted with a self-serving agenda. In reality, UPS has helped identify a problem that impacts their retail customers’ profitability—and then, provided them, the retailer, with a hassle free solution (UPS Returns on the Web) they can provide to their customers. Hassle free for the merchant, hassle free for the customers.
UPS apparently recognizes that in a BtoB environment, value really manifest in the C of BtoBtoC. UPS is helping their business customers deliver value to their customers through a better customer experience. Kudos UPS.

4 COMMENTS

  1. Donna,

    Thanks for posting the link. Since we talked about the concept and I read your report I have made two online purchases. In both cases there were several viable vendors. In both cases, I choose the vendor with the most customer friendly return policy. In one case it cost me a little more money. When I put everything in the bigger picture, it just made sense.

    John

    John I. Todor, Ph.D.
    Author of Get with it! The Hands-on Guide to Using Web 2.0 in Your Business.

  2. Dawn,

    Click on the link in Donna Barrett’s comment and then put “return policy” in the search window. This will get you to a list of discussion on the topic, including the Forrester study.

    John

    John I. Todor, Ph.D.

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