UNIVERSITY OF THE AFTERMARKET: Handling Returns Requires a Team Effort

Handling returns can be one of your business’s most critical tasks, and the repercussions of doing it improperly can be way out of proportion to the value of the items involved.

It may seem irrational for a customer to pull his business over the price of a single, small part, but it happens. Inconsistent treatment or promises made by one employee and then revoked by another or credits not paid in a timely fashion are often the culprit.

In all cases, successful handling of goods returned either for warranty purposes, initial defects, or because the wrong part was sent, starts with the front line employee. Before any team member handles a return, he needs to understand the company policy. If staff members do not understand the policy, or if you don’t have a defined return policy, handling returns can become a guessing game left up to the individual employee’s interpretations and whims, even to the point where two A-level customers are treated differently.

New parts are relatively easy to handle. If the customer has a receipt or if the customer is a regular account, the merchandise is usually returned or exchanged. What happens, though, if the retail customer does not have a receipt? And what happens when a trade customer says they bought a part from you but there’s no record of it on your computer and there is no receipt? Such incidents can try the manager’s desire for fairness and good customer relations, but a balance must be struck between these important factors and profitability and it should be included in the company’s policy.

Warranty returns are more difficult, despite the fact that warranty return policies are among the most documented. Was the failure of the part due to a defect, or was the customer at fault? Or, furthermore, was it just that the part didn’t solve the problem? When a customer is just returning the part without an attached labor claim, matters are relatively simple and most jobbers provide a great deal of goodwill consideration. Most manufacturers will provide warranty credits for such claims without much question (although they may not fill all of the stated prerequisites for such credits). However, staff should be well versed in these policies and not make promises that will have to be rescinded later.

Under normal circumstances, then, handling of such warranty returns becomes a question of company policy and staff attitude. They should know that if a part can be replaced under warranty, taking care of the customer is a priority. They should also know, however, that no warranty is free and the cost of handling warranties is generally factored in as somewhere between 1.5% to 3% of sales. Since that is built on history, it also includes a generous amount of consideration for goodwill that has become standard in the industry. Some estimates have pegged the number of unnecessary warranties at as much as one-third of all claims.

The topic of warranty handling becomes a larger one when dealing with claims made as part of a national warranty program. In such cases, a car owner from out of town may be making a warranty claim. Try to avoid treating this customer like a stranger. Understand that they are probably already stressed out since they are away from home and struggling with a vehicle repair. They may also be dealing with stressed out family members or a work schedule that probably didn’t factor in the downtime of a car repair.

One way to speed warranty handling is to make sure that your staff is well versed in the national warranty policies. You should know whether, for example, a receipt is required or if there are other warranty papers required. You should also do, within reason, what you can to make sure that reasonable exceptions are made, as allowed by the warranty administrators of course.

For example, if a person had an alternator fail, but did not have the receipt in the car, what would you do? It would seem reasonable to honor the claim if they knew which member installed the part and that it was within the warranty period, and you were able to confirm this with a phone call. In such cases, it is always important to consider the reputation of the distribution group or banner program. It is also important that any confusion about policies not be aired in front of the customer. In cases where warranty eligibility is not satisfied, explain to the customer why. If it is a case of administrative issues that you can’t overcome, explain any alternative actions the customer may take.

Note, too, that policies change so they should be reviewed regularly.

Reducing returns is, of course, an important objective. Merchandise being returned for credit can be dropped into three categories: new merchandise, warranty, and cores.

The first category makes up by far the most commonplace. According to the Automotive Warehouse Distributors Association, new merchandise returns make up 12.55% of sales, versus warranty at 2.58% and cores at 3.41%.

Obviously, the costs associated with shuttling new merchandise back and forth to no net sale is considerable. It’s a double whammy: not only does the store incur all the costs associated with a sale without actually getting one, but it can also lose a sale because a part is considered out of stock when in fact it’s just visiting a customer.

One of the first things a team member can do when working with any customer is to make sure they get the correct information. Model, Make, Year used to be sufficient, but these days many application listings will give you multiple part numbers for an application. They can also change from time to time. While uncommon, it does happen that parts listed for one application are revised. Catalog supplements should be checked first and counterpeople should not be afraid to keep the customer on the line to ensure they have all the information they need. Does it have air conditioning? Is there a heavy-duty option? Was there a mid-model-year change?

By continuing to ask for more detail, counterpeople can avoid sending out high-ticket items unnecessarily. This is an old lesson, but one that never seems to get through to everyone as evidenced by the rate of returned goods in this category.

When a return of this or any sort is made, it is best to deal with it promptly. Every person who comes into face-to-face contact with the customers should be trained in how to accept a return. This includes inside and outside salespeople as well as delivery drivers and receivers. This ensures that returned parts are fed back into the inventory as quickly as possible–thereby eliminating unnecessary duplication–and that proper credits can be recorded first hand.

Handling returns correctly is one way to build a customer’s confidence in your operation and can help to build your profits, too. Put another way, minimizing returns and streamlining the handling of those that do occur can return a benefit to your bottom line.