Business Suicide Strategy #8 Not Having a Risk Reversal or Collateral in Place – Part II

A brief recap of the key points from Part I of Business Suicide Strategy #8 involving risk reversal and collateral includes the following: We discuss how this strategy can drastically change your business profits. Unfortunately, many companies are afraid to offer risk reversal strategies because they don’t understand their importance: that is, that the benefit of any product or service is realized after the sale is made. If you reduce or eliminate this risk, the natural consequence is that people will be more inclined to buy. We compare and contrast two hypothetical approaches to how a business person might handle the sale of a puppy to a parent.

Now let’s look at 7 Nordstrom store merchandise return policies. Nordstrom, a high end retailer, really understands the value of offering ‘risk reversal strategies’. Nordstrom’s online return policy reads as follows: “Nordstrom’s Commitment to its Customers:”

1. “Our commitment to an extraordinary shopping experience” (Nordstrom uses this tagline as its motto.) While we can enjoy shopping, any time a business separates a customer from their money, it involves a trust factor between the merchant and the customer.

2. “Even if you’re making an exchange or a return, we make it easy for you.”

Here Nordstrom is giving the customer permission to return the purchase. While Nordstrom would certainly prefer that you make an exchange rather than request a refund, they have already given you permission to return the item.

It amazes me how many stores only offer one exchange for other products in their store. Through such a policy, the business is telling the prospect or client that the money they spend with us will not be returned under any circumstances. This is not a good policy because the customer cannot experience the product without fearing that they are taking a great risk depending on the price. If you refuse to give anything other than store credit, your business will lose sales as a result. Ask yourself, can your business in these economic times afford to take such a risk?

3. “A prepaid RETURN LABEL is included with every order. Only the minimum return postage fee will be deducted from your return. And exchanges are completely free – by mail, by phone or in store.”

Nordstrom includes a prepaid return label; one less hassle for the customer to address when doing business with Nordstrom. Take a good look at this language. The client calms down automatically.

4. “Exchange postage is always free! Please fill out the exchange portion of your RETURN LABEL and mail your exchange in. We’ll ship in-stock items immediately, charge your credit card, and credit the return once we’ve received received at our facility. Unfortunately, we are unable to refund original shipping charges. Don’t worry, insurance is covered when the provided label is used.”

The consumer is informed in advance that exchange postage is always free. How many companies do you know that offer such a convenient policy? Nordstrom apologizes for having to charge you for returned items, but please remember that if you return the item to the store, there is no charge. In addition, Nordstrom automatically provides insurance for returned items.

5. “Skip the exchange portion of the RETURN LABEL and simply call us at 1-800-933-3365. We’ll ship your in-stock items immediately, charge your credit card, and credit the return once we receive it back at Our Unfortunately, we are unable to refund original shipping charges.EASY RETURN OF MERCHANDISE” if you ordered the wrong size, no problem, we’ll promptly ship out in-stock items free of charge.

Now Nordstrom has taken the fear out of how to handle “What if the garment doesn’t fit you right?” Now what? The easier the business is to do business with, the more sales that business will generate.

6. “Ship your item(s) using the prepaid RETURN LABEL. We will simply deduct a flat fee of $6.00 from your order refund for return postage. Simply leave your package in a secure location where you normally receive your mail or drop it off at any mailbox or post office in the US. be sure to use the address on our RETURN LABEL: 7700 18th St. SW, Cedar Rapids, IA 52404. If you do not use the prepaid label, the $6.00 fee will not be deducted from your return at our facilities.”

Nordstorm takes the guesswork out of what shipping and handling costs will be by using a flat rate for all returns. What a powerful strategy to take the guesswork out of future shipping and handling charges. And Nordstrom even apologizes for their $6.00 policy but explains why the fee is necessary. When was the last time a store apologized for a charge you incurred doing business with them?

7. “In Store – FREE Simply bring the packing slip and credit card used when ordering to any of our stores. Click here to find your nearest Nordstrom store.”

Here, Nordstrom puts no time limits on the return date, and by doing so, Nordstrom builds exceptional customer loyalty. Nordstrom allows you to return merchandise to any store and provides you with a store locator link to find the store closest to you. By doing so, Nordstrom is valuing your time and doing everything possible to make the shopping experience pleasant and, indeed, memorable as well.

The company that reverses the risk automatically gains a competitive advantage and wins more business. This competitive advantage is very significant when it comes to attracting new customers or clients to your business. In fact, the longer you extend your warranty or return policy, the fewer returns you’ll have in the course of your business. Such customer service builds brand loyalty.

Nordstrom sets itself apart from 98% of other retailers by offering a return policy so lenient that its shoppers spend more money and enjoy the shopping experience. There will always be some customers who take advantage of Nordstrom’s policy.

This is absolutely critical to the success of your business. The longer you extend the return policy, the less pressure the buyer will feel to act quickly and return the item, thus instilling no sense of urgency in the customer, which is exactly what your business wants if you have a good product. The longer the customer uses the product, the more likely they are to keep the product.