Smart Answers

Dealing With Customers Who Abuse Return Policies


Question: We’re a startup that manufactures and sells proprietary, patented consumer products. How should we deal with the small percentage of customers who disregard or abuse our return policy; claim they never received a package when delivery tracking shows they did; or claim the product arrived damaged and demand a replacement—but refuse to ship the damaged part back?

Answer: You’re confronting an unfortunate business reality: There will always be customers who try to take advantage of you. As a startup, you should determine whether you have an unusually high number of these misbehaving customers, perhaps as a result of some aspect of your operation or product line that is underperforming. Seek out a manufacturing or professional association, or perhaps a consultant or trade publication, for benchmarks. If it turns out that your customer dissatisfaction rate is higher than average, make the needed upgrades to your products or service.

If, however, you are just dealing with the typical number of pain-in-the-neck customers–welcome to retail, says Andrew Sobel, a client service consultant and co-author of the new book Power Relationships: 26 Irrefutable Laws for Building Extraordinary Relationships. He recommends erring on the side of creating lifelong customers. “When it’s a low-value product, it’s not worth your time to fight with those people,” he says. “A customer-centric company is willing to benefit from the goodwill you earn by being a little lenient, because that goodwill brings far more benefit than the cost of getting ripped off by a few people.”

Not everyone agrees with that approach, though. I asked several experts for their take on this thorny issue. Here are some responses:

“Some customers truly aren’t worth doing business with. Let them go,” says Shep Hyken, a customer service expert and trainer. “Identify the top complainers, month after month, and tell them, ‘We’re not making you happy, and we don’t think we’ll be able to in the future. You may want to find another company to buy from.’” Think about building the cost of returns and technical support into your sales price, he adds. “If what you’re selling is really proprietary and the customer wants it, they’re going to pay for it, even if this drives up the price.”

Customer experience consultant Micah Solomon says your response should depend on how seriously your company’s finances are being hurt by these bad actors. “In general, if this string of events isn’t seriously affecting your bottom line but is frustrating you and hurting your sense of right and wrong, then doing less is better than doing more,” he writes in an e-mail. “If, on the other hand, it is affecting your potential profitability or even survival, then a different approach is called for.”

Taking a tougher approach may involve saying no, says Diane Berenbaum, senior vice president at communications and customer service company Communico. “It’s important to be customer-focused, but that does not mean acquiescing to every customer request,” she says. “Once you do that, you lose control—and it’s very difficult to get it back. Chances are if customers are asking for something outside the norm or your stated polices, they know it, and they are testing you and your system.”

The key to dealing with these customers is expressing empathy and respect even as you turn them down, rather than being judgmental and accusatory, Berenbaum says. Remember that a harsh response from you–even if you feel it’s deserved–can get shared on social media and kill your reputation quickly.

Sobel recommends making small concessions to create goodwill and give the complainer a way to walk away from the situation with some kind of win. “See if there’s something you can do that will be perceived as a value to the customer that is inexpensive to you,” he says. “Extend a warranty by 60 days, for instance. Just don’t break the bank.”

After you’ve been in business awhile, you’ll find a way to balance customer service and your business’s core principles and policies, says Lenny Farber, managing partner of W3 Business Advisors. “In a nutshell, I believe that the answer truly lies within the moral obligations of the company,” he writes in an e-mail. “If it sincerely believes it has done its best, and that the customer is attempting to take advantage of it, then the company needs to remain firm in its principles.”

Karen_klein
Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

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