Striking a Balance

By CIOinsight  |  Posted 12-01-2004 Print Email
Staples works to identify its costly customers without losing its profitable ones.

Staples Inc. is considered one of the more advanced retailers when it comes to marketing to multichannel shoppers. Customers go online or use in-store kiosks for configuring everything from furniture to PCs. And if they prefer to pay for the item at the store, Staples will ship it to their homes. Customer sales reps also wield Web-based checkout terminals that can verify product availability across multiple stores. But there is a limit to Staples' largesse.

Like most large retailers in the era of the demon customer, Staples struggles to find a balance between offering superior customer service and discouraging unethical or fraudulent behavior. Cracking down on the return of stolen goods is a long-standing concern. But more recent consumer practices such as serial returning, or buying products, claiming the manufacturer's rebate and then returning the product for a net gain, are all loopholes in the system that increase operational costs. "On the other hand, people often lose their receipts," says Rachel Trueblood, vice president of small-business marketing. "And we don't want to deny those customers the service that they deserve."

The solution is the Return Exchange, an Irvine, Calif. company that operates like a credit bureau for store returns. The company keeps track of shoppers' unreceipted returns and uses a rules-based application to assess if they are acting in good faith. "At Staples, if you are returning an item that you bought for cash and you've lost the receipt, we'll ask for your driver's license," says Trueblood. The name will be stored on the computer systems of the Return Exchange. That way, customers who are returning multiple items, or who show a pattern typical of fraudulent behavior, will be flagged and possibly be denied the right to return products. Currently, the information is not shared between retailers.

It's one of a number of emerging ways to discourage "bad," or demon, customers and reward "good" ones. For example, some companies charge a 15 percent restocking fee for certain returns.

On a positive note, the Staples Business Rewards program offers discounts, special promotions and useful tips to good customers. "For example, a computer program might determine that a customer buying outdated printer cartridges would probably be better off buying a newer, more efficient printer," says Trueblood. The business rewards program is offered across all channels: online, through the catalog and at brick-and-mortar stores. Other areas where Staples is integrating on- and offline strategies include its special offers and rebates programs. Customers can find coupons and special promotions in their area by going to the Staples Web site and entering their Zip code. "We had a lot of feedback from customers who said that they did not like rebate coupons," says Trueblood. "So we now offer a place where customers can find and fill in all rebate coupons."



 

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