Big Trouble with No Trouble Found:

Recent Accenture research shows that electronics and high-tech companies are sitting on a massive opportunity to improve and gain competitive advantage. Leading businesses in pursuit of high performance are refusing to accept “no trouble found” returns as a normal cost of doing business—and by realigning their investments they are preventing returns and improving their returns processes.

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A recent Accenture survey has uncovered surprisingly large, unrecognized opportunities for manufacturers and retailers across the value chain to gain competitive advantage on the path toward high performance.

The Accenture survey, “Big Trouble with No Trouble Found: How Consumer Electronics Companies Confront the High Cost of Customer Returns” revealed that in 2007, US consumer electronics manufacturers, communication carriers and electronics retailers expected to spend an estimated $13.8 billion assessing, repairing, reboxing, restocking and reselling returned merchandise.

Businesses looking to achieve high performance are not treating these costs as normal business expenses—rather, they are addressing the underlying reasons for these returns and, in the process, are seeing significant improvements.

Accenture estimates that the average return rate for devices ranges from 11 percent up to 20 percent. The study indicates that businesses looking to achieve high performance can see powerful payoffs by addressing the twin challenges of returns prevention and returns processing.

Returns prevention: Although returns prevention has high potential to affect results, it is often overlooked because returns are seen as a normal cost of doing business. However, the return of non-defective devices can be dramatically reduced by improving design, packaging and documentation; setting customer expectations and providing adequate customer identification; and providing after-sales support and accessories.

Returns processing: Many companies fail to decouple the return and repair processes, thus creating enormous waste and redundancies in their product returns processing. For example, potential “no trouble found” products are often not segmented early enough from defective products. Decoupling these processes allows companies to focus on growing profitability by improving agility and flexibility—and driving out considerable costs.

Companies in pursuit of high performance must realign their investments, shifting investments toward prevention and away from the reactive support of returns processing.

Accenture offers five initial steps to revitalize return-and-repair strategies:

• Focus on creating favorable customer expectations that forestall returns in order to avoid “no trouble found” returns.
• Support the product before and after sales with effective, attractive alternatives to returns.
• Implement strategies for immediately identifying “no trouble found” merchandise and return it to inventory as soon as possible.
• Elicit customer feedback to determine causes for returns.
• Look for opportunities to share responsibilities for preventing returns and streamlining return and repair networks.