Are DTC Companies Risking It All For Killer Customers?

Are DTC Companies Risking It All For Killer Customers?

Let’s face it, customers have done a great job of redesigning the eCommerce industry through excessive demands and high expectations. However, what happens when these demands cut into profit, putting your company at risk? There’s a fine line between loyal and killer customers. In this 3-part series, we reveal the top 3 ways killer customers attack your profit, along with methods you can use to identify and avoid these scenarios.

Part 1. Return Abuse (This Article)

Part 2. Shipping Scams and How to Prevent Them

Part 3. The Difference Between Friendly Fraud and Chargeback Fraud

The Killer Customer

Whoever said the “customer is always right” certainly never encountered an abusive customer. Killer customers are more than unprofitable customers, they continuously drain money from your organization. Since a great customer experience is high priority, many merchants find it difficult to maintain positive rapport with the bulk of their customers while keeping killer customers at bay.

Return policies are meant to protect a company’s reputation and give them competitive advantages. However, in the hands of killer customers, returns can be the number one profit killer. The average return passes through 7 people before listed for resale, devaluing the item. After factoring in time and costs of shipping, processing, evaluating, and restocking returned items, only a handful of these items can be resold at full price, and many will be sold at a loss. Over time serial returners cause your bottom line to suffer, but modern merchants have options.

While you work hard to safeguard your store this holiday season, consider amending your return policy to combat the 4 most common abuse tactics your killer customers use against you.

1. Wardrobing

Lady in pink wedding dress sitting on bench looking to the right

Shoppers often purchase items they intend to use or wear only once before returning. This process is known as wardrobing and is most common with fashion merchandise. Today, wardrobing is a massive problem for retailers and online merchants alike, accounting for over 7.6 billion dollars in losses in 2017.

40% of retailers have seen an increase in “intentional returns” over the past year. This is proving to be an incredibly expensive burden for retailers to take on – particularly when almost half of the retailers are already seeing their margins being severely impacted by the cost of handling and packaging returns.

 -Scott Hill, VP of Product, Brightpearl

Preventing Wardrobing  

When implementing a solution, merchants must think of a cost-effective approach that doesn’t negatively impact honest shoppers. Implementing the Shark Tag is popular new approach retailers are taking. The Shark Tag is a one-time at-home removable tag attached to garments. By placing tags in visible areas, the idea of wardrobing becomes less attractive to customers. Once the tag is removed, items become non-returnable and non-refundable.

2. Fitting Rooming

white-and-black-floral-cap-sleeved-shirt-

As you know by now, customers expect brick and mortar stores to mirror the same shopping simplicity they experience online. The reverse is apparently also true, with some killer customers bringing the “fitting room” home with them. This process is called “Fitting Rooming” and in these cases, customers order the same item in different sizes and colors to try on at home. Once they are satisfied with their item of choice, all the unwanted items are returned. Online stores that offer free returns are key targets for this kind of abuse.

Preventing ‘Fitting-Rooming’

Solving the issue involves a more creative approach that can increase brand loyalty and invite new customers. Retailers can adopt a “Try before you buy” service to allow customers to test out items they’re interested in before being charged (normally between 7-30 days). Subscription boxes also follow a similar approach, allowing customers to pay monthly to sample specific products before purchasing. These strategies help merchants keep track of specific items they expect to be returned, lowering the costs associated with unpredictable ‘Fitting-Roomers.’

By the end of 2019, A quarter of all retailers are expected to incorporate a “try before you buy service.” This practice allowed companies like Stitch Fix to see a 25% increase in net revenue over a year. Customers are more likely to opt into “pay later” options with confidence, knowing there’s a hassle-free return involved. Best of all, you’ll see an increase in conversion rates.

3. Counterfeit Returning

Close up on two store receipts

We recently warned eCommerce companies about cybercriminals getting creative with their hacking tactics. If you gave the article a read, you may not be surprised to learn killer customers are getting just as creative. Thieves a re now using high-quality scanners and printers to make counterfeit receipts and return merchandise they’ve previously stolen from stores. Also, customers are taking extreme measures to use fraudulent credit cards when making online purchases to return items in stores in exchange for money or store credit.

Companies like Nordstrom built brand loyalty based on their legendary “free to return everything” policy. This policy allows customers to return items without a receipt regardless of when (or if) the purchase was made. Abusing this policy can severely damage sales, gross margins, profitability, and most of all, make inventory management a nightmare.

Preventing Counterfeit Returning  

To eliminate counterfeit returns, it’s always a good practice to require receipts. Take it a step further to implement a 30-day limitation on returns and/or restrict popular items and high-volume orders from being returned. These minor tweaks will turn away customers who seek to return stolen merchandise and can also keep away Fitting-Roomers. Lastly, utilize an ERP or platform, tracks repetitive returns by requesting proof of identification. This process makes it easy to cross-reference sales and get alerts when a customer excessively returns items. Once you know who your killer customers are, you can ban them (or at least take them off your email lists).

4.Customer Service Abuse

Abuse from customers is not part of the job sign

Offering lenient return policies, providing 24/7 accessibility, and creating engaging content reflect excellent customer service, but there’s a limit. These practices subject retailers to vulnerabilities as abusive customers take advantage. Identifying and dealing with these customers becomes difficult and, in some cases, an expensive task to take on. Customer representatives spend hours handling disorderly phone calls and receiving verbal assaults. This manipulative tactic is used to further gain refunds and discounts from merchants.

Beyond assaulting your customer representative, your reputation is next in line. If customers don’t receive the shopping experience they feel they deserve, they will switch to you competitorwhile dragging your reputation through the mud. Social media is easily accessible for killer customers to provide negative feedback about their experiences with your brand, and can spread like wildfire. Upsetting the wrong customer with the right amount of influence can become a PR nightmare. If your brand has a bad reputation, 90 % of customers won’t shop with you.

Preventing Customer Service Abuse

 After implementing the previously mentioned solutions. Invest in training for your customer representatives. Focus on equipping them with the knowledge to properly manage abusive customers using proper escalation procedures. Lastly, closely monitor all social platforms to stay on top of negative comments, and have policies that clearly outline how and when your reps are allowed to pass on benefits and freebies to customers. You can also use Instagram’s “hide offensive comments” feature to automatically filter out offensive comments and block users on the platform.

Final Thoughts

Analysts predict that online and offline return fraud will cost companies $550 billion by 2020 and $3.5 billion during the holiday season. While the goal is to satisfy your customer and keep them coming back for more, be sure to protect your business in the process. However, as we pointed out above, serial returners and abusive customers can have a similarly devastating affect on your business. If you don’t have much info on your killer customers, now may be the time to rethink your priorities, especially as the post-holiday returns season looms.

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New Austin, TX Office & VP of Client Services for Redstage

New Austin, TX Office & VP of Client Services for Redstage

Austin, TX – 9/22/19 – Redstage, the award-winning eCommerce development agency, welcomes Jason Crickmer as VP of Client Services and Solutions. The new member of the executive team will manage client-facing delivery and project management from the newly opened U.S. office in Austin, Texas.

The Austin office complements Crickmer’s appointment to jumpstart and lead growth in the southwest USA. “I am honored and excited to be leading Redstage’s growth in this market, knitting even tighter connections to our partners and clients in this region,” said Crickmer.

Previously, Crickmer served as the CEO of Praxis Information Science and Vice President of Customer Success at Alegion. His 25 years of experience in software engineering, strategy, client services, customer success, product, and team development serves to strengthen team organization and provide superior customer experiences to clients.

“Texas and the southwest are a major hub for eCommerce and Austin in particular, is the nexus of it all. Several of our closest partners like BigCommerce, PayPal, and Adobe are either headquartered there or have a strong technical presence in Austin,” said Crickmer.

As part of the Fulcrum Digital family of companies, Redstage is supported by more than 1,000 employees around the world, with offices in the US, UK, Brazil, Argentina, India, and Australia. The Austin office represents Redstage’s 9th location. The agency’s B2B portfolio that currently includes Church & Dwight, Olam International, Reckitt Benckizer and more.

For more information regarding Redstage’s B2B eCommerce services, click here.

About Redstage
Redstage modernizes and supports digital systems for B2B companies through end-to-end eCommerce services to drive stable, long-term growth. The agency specializes in the latest technology, with a reputation for bringing storied B2B companies into the digital age and teaching them to scale further, faster. Driven by experience. Guided by innovation is the Redstage code. Redstage’s goal is to accelerate eCommerce development, inspire confidence, and empower digital retailers.

 

Entrepreneur Podcast Network Interviews Redstage CEO on Transformative B2B eCommerce

Entrepreneur Podcast Network Interviews Redstage CEO on Transformative B2B eCommerce

Entrepreneur Podcast Network Interviews Redstage CEO on Transformative B2B eCommerce

What is Transformative B2B eCommerce?

This week, Eric Dye of the Entrepreneur Podcast Network interviewed Redstage CEO Adam Morris on the coming B2B eCommerce revolution. In this episode, the pair discuss the latest trends, market news, and strategies for companies who “NEED” to adapt to the new standards of digital commerce. Click play above to listen now or follow the link at the bottom to download the podcast. Happy listening!

Insights included in this entrepreneur interview:

1. “What does the B2B eCommerce market look like and why is B2B super hot right now?”

2. “How is B2B eCommerce different from traditional online retail?”

3. “What are the main roadblocks for companies going digital?”

4. “I’ve seen a lot about Redstage and Transformative B2B eCommerce, what is that exactly?”

5. “For companies thinking about going digital, how does Redstage’s process help companies achieve positive digital transformation?”

Download the full podcast here.

Don’t forget to check out the ePodcast Network for more entrepreneur insights!

About Adam Morris


Entrepreneur Podcast Network Interviews Redstage CEO on Transformative B2B eCommerceAs a digital entrepreneur, Adam Morris has been working alongside Anthony Latona (Redstage’s CMO) since their university days. The duo co-founded several businesses together over the years, most recently Redstage, which started in 2008. As Morris recalls, “All of our businesses revolved around online commerce, and we’ve had a knack for being ahead of the Internet business curve. Redstage is an eCommerce agency that specializes in web design, development, strategy and support for B2B and B2C clients all over the world. As part of the Fulcrum Family of companies, we have over 700 employees on 5 continents. For the past 10 years we’ve been transforming companies through eCommerce, now focusing primarily on Magento and Shopify. With B2B eCommerce set to explode before the end of the decade, we’re ready to take on the biggest challenges facing the world’s largest companies – especially when it comes to tackling the transition to digital, something we’re quite good at.”

If you enjoyed this podcast, check out this post on MagePlaza about our developers’ biggest “B2B Pet Peeves” (the top 4 signs that a B2B site needs to upgrade).