What’s a costly promise?
It’s something that sounds good but ends up costing you dear.
An example would be “Free Returns.”
There is no such thing.
Not if you’re the supplier.
You have to pay for that customer benefit.
As far as we know, Royal Mail and other carriers have yet to start supplying their services for free.
Offering “free’ returns to customers sounds good.
Until that is, they start taking you up on the offer in a big way.
There’s no doubt that online shopping is hugely convenient.
Except for one teeny little detail if you’re buying clothes.
You can’t try them on.
That’s why many people order two or even three of the same thing.
The items that don’t fit will be coming back at your cost.
That hits the margin you’ve made on the item that fits.
You can build the cost of returns into your pricing based on a forecast of how many items will come back.
However, forecasts can be horribly wrong, as some big online fashion companies have discovered.
When we create benefits, we also open the opportunity for exploitation.
Customers who order more than one of the same items are not doing anything wrong; they are taking advantage of the system created for them.
That’s not the same as people who purchase an outfit from a bricks-and-mortar store with an excellent returns policy to wear the item to a party or function, returning it the following week.
Those “customers” plan to use the system to achieve a free hire.
Many independent online retailers feel forced to follow the free returns trend.
But why should they?
They’re not Amazon, and nor should they try to be.
If you work in a big business, this (probably) won’t resonate with you.
Yours can weather the impact of costly promises.
If your enterprise is small, seek higher margins so that you can continue delivering great service to your best and most deserving clients.
And, if you’re planning a sales promotion with an excellent offer, check that you’ll make money if the offer has a high take up.
That’s easier said than done, but it’s essential all the same, whatever line of business you’re in.
For example, if you plan a sales promotion with an excellent offer, check that it will be profitable.
Sudden bursts of sales can generate additional costs for a business.
Overtime and extra shipping costs, for example.
Just make sure your offer covers costs and still makes a profit.
Very best,
*Retailers, not Amazon, pay the cost of customer returns.