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Frustrating the customer.

The U.S. electronics industry boasts some of the most sophisticated products around.

So why do consumers keep bringing them back?

The $60 billion a year U.S. consumer electronics market has a hidden "travel cost" that's squeezing profits, losing customers, and will eventually force prices up, even in this famously competitive industry.

This expense does not have to do with shuttling salespeople around the country but rather, the unnecessary trips an increasing number of products are taking from the retailer to the customer's home, back to the retailer, and then back to the manufacturer.

Product returns are at record highs. Millions of dollars worth of perfectly fine electronic products are coming back to stores and manufacturers. According to a recent study from the Consumer Electronics Manufacturers Association, average returns in consumer electronics hit a record return rate of 5.2 percent in 1995. And I'm confident the figure for 1996 will be even higher.

Much of the problem stems from the way sophisticated electronic products are sold by mass marketers. Quite simply, consumers don't know how to use the high-performance camcorders and VCRs they buy, and big retailers don't have the knowledge or the inclination to teach them. This is a ready-mixed formula for customer dissatisfaction that helps explain why returns hit an astonishing 9.8 percent in 1995 at the mass merchandisers alone, almost twice the already high industry average.

Sadly, the problem is exacerbated by plain old-fashioned dishonesty. People who wouldn't take a newspaper from an unlocked dispenser without paying the 50 cents think nothing of "borrowing" a $1,000 camcorder system by buying it Friday, taping the niece's wedding on Saturday, and bringing it back Monday, claiming the equipment was not satisfactory. This appears a distinctly American phenomenon. In Europe, the consumer culture places more responsibility with the buyer; returns require more than just a receipt.

But the stories about such occurrences in America are legion. Products are returned with parts and instruction books missing. Case in point: One customer returned an expensive new camcorder to the manufacturer complaining that it had just stopped working. The manufacturer's service department examined the camera, and found there was still a tape cartridge inside. When they played the tape, they watched the camcorder make a sudden trip to the bottom of the customer's swimming pool - after which, of course, it stopped working.

My personal award for fraudulent persistence goes to the individual who returned a laser detector unit to Cobra for credit - though it wasn't our product. The creativity of this particular individual's attempt is arguably commendable, however; the customer had taken an empty box, spray-painted it the color of the real Cobra product and glued a fake LED display on the box for an extra touch of realism. The rogue product was accepted across a retailer's counter and shipped back to Cobra for full credit.

Certainly, most returns are based on misunderstanding rather than larceny. But in either case, the "returns epidemic" makes it clear that we, as an industry, must re-examine the way high-end consumer electronics are sold.

To cut costs and prices, big retailers and smaller discounters are selling $1,000 television sets with the same level of personal service your local grocery chain store gives to selling a $4 can of dog food. More often than not, consumers are left to wander around these high-volume discount palaces, hoping to pick up some bit of useful information from a point-of-purchase display. Of course, manufacturers haven't helped the situation by writing instruction booklets with all the lucidity of the Dead Sea Scrolls. But the problem comes back to the stores.

Inadequately prepared salespeople give customers little information on what to expect when they get the product home. After paying a major league price for the product, the customer goes home and becomes immediately frustrated because the product won't work.

In the majority of cases, this is because the customer has installed the product improperly or isn't operating it correctly. But, loathe to wrestle with a dense, virtually impossible-to-follow instruction book-let - and feeling more than a little victimized - the consumer packs up as many parts as he can find, stuffs them, often angrily, into the packing box, and heads back to the retail store from whence his expensive new toy came.

Once in the store, the same sales clerks who can't counsel customers on what to buy or how to work it are equally unprepared to figure out why a product is being returned. The only question most of them ask is: "Do you have your receipt?"

Consumer technology is confusing. Simply operating the latest home entertainment gadgets can be perplexing, and even more so when a problem arises.

Clearly, this gap in consumers' knowledge must be corrected at the point of purchase. And if mega retailers are not up to the task, consumers will be less likely to invest in the next generation of technology, and they'll lose brand confidence because they had first-hand experience with a product they thought was defective.

What's the answer? I recommend a return to the specialty retailing operations of 30 years ago - at least for high-priced consumer electronics. When people began buying home stereos in the late '50s, for example, they generally headed for the same local store where they'd bought their first color TV. The representative came to the home, set up the system, reviewed the instructions, and gave a personal demonstration of the miracle of stereo.

The sophistication of home electronics has exploded since then, which makes the need for this kind of personalized service that much greater. Would it drive up the cost of selling? Probably. But it would also increase customer satisfaction, vastly reduce the number of returns, and bring more customers back into the consumer electronics market.

There is, in fact, a nascent movement underway at present for this return to specialty retailing. Some retailers are essentially becoming counselors for the purchases of high-end electronics. They will send a representative to the customer's home and counsel them as to just what kind of home entertainment system would work best for them. These customers get as much one-on-one instruction as they need in how to use their new equipment.

The costs involved mean that this will never be standard procedure for most products in most stores. But some people will be willing to pay a premium for this level of service. In fact, it's not unlike having an interior decorator come to hang your drapes. You could do it yourself, but wouldn't you prefer to have it done right?

Practically speaking, there is no one easy answer, but both retailers and manufacturers can work together to greatly ease the problem. Manufacturers, for their part, need to make product manuals user-friendly. And retailers, in turn, are the last line of defense. They need to train salespeople sufficiently as to how products operate so that they may ask intelligent questions when a product is returned. Salespeople don't have to be technicians; just a simple working knowledge of the products will do. It will save the aggravation of paperwork generated by a return, and customers will go home happy, convinced that the sales clerk is a genius.

And that's not a bad return.

Jerry Kalov is president and chief executive of Cobra Electronics Corp., a publicly owned consumer electronics company headquartered in Chicago.
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Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:consumer frustration with electronic products
Author:Kalov, Jerry
Publication:Chief Executive (U.S.)
Date:Jun 1, 1997
Previous Article:Keeping the dream alive.
Next Article:Delighting the customer.

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