Balancing Customer Service Costs with Competitive Advantage
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In approximately 2 pages discuss, argumentatively, the following position statement.
In order to attain or maintain competitive advantage, retail organizations must take particular care in establishing return policies. Within this discussion mention the cost of losing a valued customer due to rigid policies vs. the cost of consumer return fraud. Also, address whether policies might differ between different types of retail outlets.
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Solution Summary
This solution of 615 words explains how retail returns policy should be developed to get competitive advantage with specific scenarios. The references related to the answer are also included.
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In order to maintain competitive advantage, retail organizations must take particular care in establishing return policies. The cost of losing a valued customer is far higher than the cost of consumer return fraud.
In a retain organization the cost of losing a valued customer includes the cost of acquiring a new customer to replace the valued customer. The costs are staggering. A new customer has to be attracted through advertising, promotions, price sensitivity, personal selling, and setting up new accounts. The company has to spend on each of these factors to attract new customers. In addition, the entire organization has to undertake activities designed to acquire new customers. In contrast if a valued customer is not lost, it is profitable. Additional profits accrue because of reduced price sensitivity, reduced switching to competitors, increased referrals, and increased repeat purchases. When a valued customer is retained there can be savings on the frequency of advertising and promotions. When ...
Education
- BSc , University of Calcutta
- MBA, Eastern Institute for Integrated Learning in Management
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