Promote Packages to Decrease Refund Demands

When consumers are asked why they stopped patronizing a particular store, many times the answer has to do with how returns and refunds were handled. Therefore, it is in your interest to have liberal policies and procedures when it comes to accepting returns and giving refunds.
     Along with this, it’s nice to have as few refund requests as possible. One tactic is to carry quality merchandise and then let customers know about the quality. Stanley Marcus, former chief executive of Neiman Marcus said, “I believe that retail merchandising is actually very simple. It consists of two factors, customers and products. If you take good care in the buying of the product, it doesn’t come back. If you take good care of your customers, they do come back.”
     Avoid deep discounts. Research at Israel's INSEAD and at Stanford University confirms that when people buy items at what they consider to be deeply discounted prices, they tend to end up feeling the benefits are less than if they'd paid full price. And people who think a product or service is inferior are more likely to request refunds.
     Other research suggests another tactic: Promote the sale of packages of products. Researchers at Harvard University and Hong Kong University of Science and Technology began by noting the frequency of what’s called price bundling. Liquor stores sell wine by the case. Restaurants offer four-course meals. Theatre companies and sports teams promote season tickets.
     The researchers then found that when consumers buy the package, they are less concerned if any one of the components in the package fails to satisfy. One bottle of wine being off is not as likely to lead to a request for corrective action when you’ve a whole bunch of other bottles in the case. If the appetizer fails to meet expectations, that disappointment may be soon forgotten when the delicious entrée arrives.
     There are three sorts of reasons for refund demands decreasing when the consumer has purchased a package:

• The overall experience is satisfying. In accord with Mr. Marcus’s suggestion, don’t allow package sales to become an excuse for inferior merchandise or services.
• The consumer has trouble allocating value to an individual item. This argues for telling the shopper the percentage they’re saving by purchasing the package, but not stating the dollar savings or listing the price of each item.
• The user has had enough before consuming the whole package.

Click below for more:
Let Customers Get Away With It
Bundle Pricing, But Limit BOGOs