The holiday season may seem like the most critical make-or-break moment of the year for retailers and consumer electronics manufacturers, but industry insiders recognize that this assessment is off by a week or two. True financial success or failure is actually measured during January and February, when companies deal with an avalanche of returns.

Returns are serious business. The high cost of transportation, handling, product disposal, lost sales revenue, and the complex logistical details involved in the returns process can knock the foundations out from under a business already faced with tight competition and very narrow margins. And these challenges are notorious aspects of the consumer electronics manufacturing industry. So when it comes to returns management, what’s exactly at stake? And where can companies target potential improvements?

The High Cost of Returns

As of 2012, retailers and manufacturers in the U.S. are now spending approximately 100 billion dollars each year on returns management alone. 17 billion of these dollars are spent by the consumer electronics sector, which has experienced a 21 percent increase in returns expenses since 2007. According to survey results, most electronics manufacturers see these numbers trending steadily upward, not downward, in coming years.

Returns Management: Identifying the Source of the Problem

Surprisingly, the most common reason behind consumer electronics returns isn’t related to product flaws or customer dissatisfaction. Only about five percent of returns are cited as defect-related. Instead, customers tend to return electronics due to buyer’s remorse. Customers also demonstrate a very light commitment to an electronics purchase if they experience frustration or a lack of support as they attempt to install the product, start it up, or use it for the first time.

Providing more aftermarket support may reduce these “no fault found” returns, but this represents just one of many possible solutions. Others include focusing on the design stage, improving operability, and making products more user-friendly.

Returns Management: Handling Customer Complaints

A strong customer service strategy can also cut into the losses generated by annual returns. Educate your CRM team and develop a service call avoidance program. This will reduce your total number of complaint and service calls and increase your overall rate of first call completion, or issues resolved after just one call.

The key to exceptional customer service may lie in your hiring strategy. Carefully screen (and train) every member of your call center staff. Your customer service staff should be able to understand all relevant consumer electronics issues and communicate assistance clearly and effectively.

Returns Management: Reverse Logistics

Are you outsourcing the services of a company that specializes in return logistics? If so, you’re not alone. But if possible, consider partnering with or directly acquiring companies that specialize in return services and asset disposal. Remarketing, refurbishment, and IT recycling are becoming increasingly specialized industries and you may generate greater efficiency by fully incorporating the services of established firms.

For general business news and guidance with HR strategy and human capital management, contact the experts at Pace Staffing Network. Put our experience to work for you.