Let’s pretend for a minute that all of your products deliver equal amounts of profit – for example, you stock 2 different brands/models of guitar strings and you make $10 profit on every packet. Let’s also pretend you are a guitar string pure play, no other products. You sell 5 of each in a day, you clear $100 and business is good. Correct?
Maybe. See the thing with guitar strings is that some are high quality, some are low quality. How does this impact your $10 profit?
- Low quality strings: these have a high return rate because they keep breaking prematurely, causing an increase in costs due to processing the return
- High quality strings: most players baulk at the cost of the high quality strings, meaning each sale takes a lot of upselling and convincing by your staff, increasing your costs in sales
Each packet of strings delivers the same profit, but to increase it is a Trust & Safety opportunity, and is different by product. Do how do you do it?
Selling low quality products means your after sales and returns costs will be generally higher. Products break, they degrade faster than they should, they’re often not fit for service and Australian laws mean you probably have to accept a return. Don’t spend your time trying to sell a bucket load of these. Your T&S opportunity is in Incident Response and lowering your cost per return. Customers that are returning these products are angry at having to return to your site/store, and are ready to drop you for future products. Yes, guitar strings are easy to break and the customers buying cheap strings are probably the ones most likely to break them (vs buyers of high quality/expensive ones). Refunding your buyer no questions asked is probably the best approach, and going through the process to claim back from the supplier also may not be worthwhile. Refunding immediately shows you care about your customer, and allows you to begin talking to them about higher quality products.
While these are far less likely to break (and the buyers less likely to be string-breaking people), these products do take a lot of effort to get out the door. Your T&S opportunity is in Quality customer experiences. This means you’ll spend more time with your customers helping them understand why spending more money is a good idea – they break less, they sound better, they’ll last longer and you’ll be playing like Jimmy Page in no time. Spending more time pre-sales will give you more chances to increase basket size, maybe they’ll buy more than 1 set of strings? You should make sure all your staff are experts in these products, transferring customers around hurts your chances of a sale. Your pictures, description, how they’re placed in merchandising need to be great. These products reflect you, your brand and your purpose, you have to get these right – you didn’t go into business to sell cheap guitar strings after all. Do you know which of your products are of a higher quality? You need to know this so you can steer your customers here. Measure things like return rate, complaints or negative feedback rates, analyse this data and work out which products are your north star for customer experience. If fact, measure it for every single product you sell, you may find your $10 profit per set of strings varies quite significantly once you take into account the cost of these negative customer experiences.
A Trusted Brand
While reducing costs and increasing basket size are great ways to increase profit, the bigger return comes from having a Trusted Brand. Customers that have great experiences, whether measured by Net Promoter Score, return rate or something else, are more likely to return to your business, buy more in future and tell their friends. This much is obvious, and you can do more. Be proud of your returns policy, be proud of your high quality products and tell your customers about them. If you have a Trusted Brand selling quality products, then marketing your customer experience policies won’t increase returns! It will however build confidence for potential customers to choose you over someone else and get more people through the front door or to your site. Just be mindful, you have to have great a great Safety record (Incident Response and Quality programs) in place before you can promote yourself as a Trusted Brand – customers will know if your customer experience isn’t matching up with your marketing.