Companies Need a Process for Handling Returns

Review your return policy to ensure that it is clear, covers all types of returns and is being applied consistently.


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Customer returns are a hassle that must be planned for in any organization. No company wants to have their products returned, but effectively handling the situation is one of the keys to enhanced customer satisfaction. There must be a process in place to make returns as painless as possible for both customers and suppliers. The process generally starts with a return material authorization (RMA) step, which might be the most important step in the returns process because it is a true customer/supplier interaction and may necessitate upfront negotiation.

The RMA step generally begins with a customer providing information about the product they received. The product could be wrong, as in ordering “A” and receiving “B;” it could be damaged or defective; or the customer could simply want to return the product because it did not meet a perceived need. The RMA step for each of these could be slightly different.

When the wrong part is shipped, it is embarrassing for the supplier. Therefore, it is critical to get the correct part to the customer as quickly as possible by creating an RMA number, which companies often use to create a replacement order for the customer. Making a customer wait until the wrong product is returned before shipping the correct product is not good customer service. The supplier may request some further details about the wrong product sent in order to determine what caused the error, but the goal is to make things as easy as possible for the customer to get the product they ordered. Depending on the value of the product that was incorrectly shipped, a supplier may simply suggest the customer keep it without enduring the hassle of a return. One of my clients supplies hardware to customers, and in most cases, it does not require a return of what was erroneously sent.

Damaged or defective products lead to a more complicated return process. If a product is damaged, this becomes an issue between the carrier, supplier and customer, often taking some time to resolve. For the sake of good customer service, the supplier should take the initiative to get a replacement product to the customer as soon as possible. However, there may need to be some financial agreement reached pending ultimate resolution of the reported damage issue. Again, the value of the product will likely impact the supplier’s course of action. In many cases, a defective product requires a return to the supplier for evaluation. An RMA should be issued immediately to facilitate this. Upon receipt of the product, the supplier’s evaluation should be expedited. If the product is defective, there may be more of them in house (or shipped), and the supplier needs to know this to take corrective action. Also, the customer does not have a needed product that they were invoiced for. The longer this goes on, the more unhappy the customer will become. Finally, the product may not be defective, but the customer may need some guidance in its proper use. If this is the case, you can then get paid in a timely manner for providing the customer with a perfectly good product. Ideally, an organization should have a documented process for handling each of these potentially defective returns to ensure they are handled expeditiously.

When a customer wants to return a product for any other reason, it is beneficial to have a return policy in place and clearly spelled out on all documentation (quotation, order form, acknowledgment, product description on website and more). The return policy may require a customer to assume all shipping costs of the return or a restocking fee. The policy may even specify no returns of custom-made products if they are truly made for a specific customer or application. As long as there is consistency in the application of a returns policy, a supplier may adopt one that is most relevant to the business. Keep in mind that the more restrictive a returns policy is, the more likely it is to deter a customer from buying. Yet, like many things, a returns policy is a business decision and will vary from organization to organization.

If you do not have a process in place, now is the time to give it some thought. It is always better to have a process in place rather than handle problems on-the-fly.

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