The most expensive refund

During my recent trip to Tulsa, I stopped into a chain drug store (similar to Walgreens) next door to the hotel.

When I got to the register, a mom with two young kids was trying to exchange an item she had purchased for a very similar item that had the same price and was made by the same company.

Standing in line behind her, it seemed like a pretty simple thing to exchange an unopened, undamaged item from the same company.

But not today, not with this policy and not with this manager.

Your card, please. It’s our policy.

You see, the mom didn’t have the debit/credit card that was originally used to pay for the item – because her husband paid for the purchase during their last visit. He wasn’t with her on this trip.

Despite the fact that she had the original receipt, the store manager couldn’t adhere to store policy without the card used to make the purchase.

You see, store policy required that he refund the item being exchanged onto the original card used to buy the item, then sell the exchanged-for item as a new purchase. It really wasn’t an exchange, but a refund and a purchase – and that’s why policy intervened.

The store’s point of sale system was designed to enforce the store’s refund policy, which required having the card present in order to refund. Having the original card used for the purchase is not a requirement of a merchant card vendor account. It’s an intentional limitation put in place by the store to serve their refund policy.

Most likely, it’s designed to make it impossible to return cash back to a customer who paid with a credit or debit card. In the case of a return for refund, this makes perfect sense – but it still doesn’t require the original card. Merchant card accounts are perfectly capable of refunding or voiding purchases to the original account – even without the original card being present.

Win-win policy

In situations where a customer is exchanging identically priced items, a refund-only policy puts staff and management in a bad place.

Normally, the register clerk would’ve exchanged the item with a simple transaction at the point of sale where the barcodes on both items are scanned and no money changes hands. This transaction makes sure that inventory reflects reality and that store replenishment is correct when the next truck arrives – both good things. This serves the needs of the customer as well as the store. While tax-driven issues can be created when there’s a long period of time between the original purchase and the refund, they can be handled.

An exchange policy that is really more of a refund and new purchase policy turned this into far more than a simple transaction. Policies should give a manager the ability to be a customer advocate, even while protecting the store.

Training matters

As the manager repeatedly quoted the same policy-driven argument with the customer, that well-intended, audit-proof store policy turned a repeat customer into an upset customer who might never return.

This wasn’t entirely the manager’s fault. He was simply adhering to corporate store policy. If he defied it, transactional data sent to corporate could mean he’d have to answer for his efforts to please the customer, despite the zero cost transaction.

Does your management training encourage your staff and managers to make common sense decisions to preserve customer relationships? It should. The cost of an equal exchange nets out to zero, unless you lose a long-time customer in the process.

Hard costs

Losing customers like a family with two young kids over the exchange of a $12 item is a poor choice. Two kids under the age of five means 13 years of drug store trips, say $20 a month. 13 years (age five to 18) times 12 months times $20 a month is $3120, not including the word of mouth costs of losing that customer. $3120 doesn’t seem like much, but it’s the cost of just one exchange transaction that should cost nothing.

While writing policies to protect your business, be sure to consider how they’ll work in the field. A group that included an experienced register clerk, a store manager and their assistants could reveal win-win training and policy changes that protect this business while encouraging customer loyalty.

The most expensive refund is one that costs you a customer.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title="" rel=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>