Refunds, Rebates, Returns & Recession

This was posted on Ambie's Blog on Friday 11 September 2009. 

Nowadays we hear a lot about people asking for rebates, returns and refunds especially in the US market. Customer support and technical support of businesses get a lot of callers asking for return of products, refund of money or while purchasing they ask for a lot of rebates. Why this has become a trend now? Or are we getting a lot of spotlight on this aspect of business nowadays?

People ask for rebates and refunds but businesses are very reluctant in giving them. We have people lamenting about the worthlessness of products compared to the price. They whine about how they have been duped by the sales person to shell out lot of money on a product that would not meet their requirement.

Many of my friends working in the customer service divisions working on the US markets, tell a lot about this. At times people pay for a service and after completion of the service ask for a refund claiming that the amount charged was too much for the service provided. They would threaten a law suit claiming that the service they have been charged for was part of the free service agreement during the time of purchase. This prolongs the service incidents of the business and costs money as almost all businesses have toll free numbers for which they pay for the customers to call them.

Interestingly some of the businesses call the customers when the issues get aggravated due to unreasonable claims by the callers or untenable service quality by the representatives of the businesses. This case is worse than the tall free call. The business pays money for the call as well as higher pay for the personnel calling the customers and they would have to track the incident till they satisfactorily resolve the issue raised.

Abundance of knowledge through internet has also been a reason for this. Users of products surf the net and read a lot (expert opinion and casual remarks in expert language as well) and get worried when they experience a hitch in the functioning of the product. They tend to recall all they have read about the product, possible causes of failures, possible fixes for the failures etc. before getting the trained experts of the product take a look at the situation and provide a resolution.

Nowadays we see a lot of comments for product reviews and analysis online. Most of them highlighting a negative experience of a distant past and from a dim memory. Headquarters of businesses have seen a spate in receipt of complaints, most of them squealing for a refund/rebate. A careful look into the prevailing economic and social situation would lead us towards an understanding of this scenario.

The mindset of people is that with the loss of jobs and hardship to find new jobs, is to hold money as much as possible for turbulent times. Businesses would like to maximize their profit by cutting costs in every possible aspect. This most of the times put both the parties to the transaction in a denial mode. Customer refuses to accept what the business offers and business refuses to give what the customer demands. They both have no patience to sit and talk their problem out for a reasonable solution.

Businesses need to have people who have the patience, understanding and conscience of the prevailing situation to handle customer service especially during trying times like the present. But most businesses still run on a target of sales and good index numbers for QoS. This makes the representatives of businesses push the customers to buy products. Such a push leads to exasperation of customers who are already irritated.

An exasperated customer is very hard to handle and could hardly be convinced to stay put doing business with insensitive pushy people. Businesses those boomed and puffed their purse with money with sales without responsibility of service are now suffering. Those who were proud of minting money during the boom with insensitive sales and irresponsible service, have now suffered heavy losses. Some have been closed down many of their profit centers.

One good thing that has happened in the worldwide market due to the recession is that people have become price performance sensitive. Most of them already were, but the graph of sensitivity and the count people who have it, has the arrow representing both going upwards. Businesses have to understand this and instead of blindingly targeting to exceed the past number tally, they have to be innovative enough to hold their customer base in tact atleast until the economic recession recedes and boom blooms.