Many Happy Returns: How Product Managers Can Make Product Returns Work For Them

by drjim on October 4, 2010

Too Many Returns Are Bad, But Too Few Are Also Bad…

Too Many Returns Are Bad, But Too Few Are Also Bad…

Every product manager likes to think that once their customer has purchased their product, that’s the end of the story. The reality is just a bit different: for a whole bunch of reasons, our customers can change their mind about buying our product and decide to return it. What’s a product manager to do when this happens?

Returns Are A Good Thing

You might not realize it, but a certain level of customer returns is what a product manager really wants. Returns indicate that your customers are buying your products and the correct level of returns shows that enough customers are buying enough of your product. These customers are also buying other products from you at the same time. Too few returns means that you haven’t maximized your sales and too many means that something is wrong.

The role of a product manager is to keep track of the level of returns for his / her product. You’ll have to determine what the correct level of returns is, but once you know this then you’ll have to carefully mange it.

How NOT To Lower Returns

When too many of your customers start to return your product, then you’ve got a problem on your hands. All too often product managers may take the wrong actions when this situation shows up. One of the simplest (and wrong) things to do is to toughen up you product’s return policy.

Making a return policy more restrictive, for example shortening the window in which it can be returned, can end up reducing not only your returns but also your sales of y our product.

What Causes Customers To Return Products?

There are, of course, a lot of different reasons that your customers may decide to return your product after they have bought it. Two professors who have spent a lot of time studying what motivates customers to make returns are Dr. Andrew Peterson and Dr. V. Kumar.

One of the things that the researchers have uncovered is that when customers buy discounted products, they are less likely to return them. At the same time, what they’ve discovered is that HOW a customer buys your product may have an important bearing on if they will end up returning it.

When one of your customers buys a product that they are familiar with, but buys it using a different distribution channel (buys it online instead of from one of your firm’s sales teams), they seem to be less likely to return it.

The level of returns seemed to go up when your customers bought new products the way that they normally buy products (e.g. through your sales teams) or buying new products using channels that they are not used to (buying online for the first time).

How Can A Product Manager Lower The Rate Of Product Returns?

Product managers who have a problem with a customer returning too many products need to take action. Before doing anything, the product manager needs to take a close look at how the customer is buying the products that they are retuning.

Your initial steps to lower your rate of return should be to attempt to steer your customer who is making the returns to start to buy from you using a different channel. Sending them coupons or promotions to make use of a different channel is a great way to start this process.

How Can A Product Manager Boost The Rate Of Product Returns?

It sounds sort of counter-intuitive doesn’t it? It turns out that the proper level of returns means that your customers are buying enough from you – too low of a level of returns and they aren’t buying enough.

Product managers facing low product return levels need to reach out to their customers and encourage them to buy new products using new distribution channels. This will not only probably boost their return levels, but it will also boost overall sales.

What All Of This Means For You

Instead of being something that you need to fear, a product manager needs to view product returns as being a natural feature of their product. This also means that it needs to be managed.

In order to reduce product return levels, product managers need to drive customers to make purchases using channels that are more familiar to them. If product return levels are too low, then customers need to be encouraged to make more purchases using new distribution channels.

Realizing that product return levels are yet another metric that is available to them that will show how well a product is doing allows product managers to ensure that their products will have many happy returns…

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: which problem would you prefer to have: too many or not enough returns?

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What We’ll Be Talking About Next Time

It turns out that a Product Manager really doesn’t do all that much. I mean, they don’t actually create the product and they don’t actually sell the thing now do they? Sorta makes you wonder just exactly they do do? It turns out that most of a Product Manager’s time is spent doing scary stuff, like managing people and getting them to work together in order to get a product created and out the door…

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