By Disha Chhabra

In an era of cut-throat competition, especially in the world of e-commerce, the headline of this article might seem strange. After all, most internet companies are burning cash only to acquire more and more customers and make them transact. Company valuations are being based on the number of unique transacting users.

Despite all this, just as the numbers begin to grow, companies are beginning to realize the burden of bad customer acquisitions, and are even going to the extent of blocking some customers from transacting further.

So, who exactly are these customers? How do companies identify such customers? And how best to handle them, ensuring the company reputation is not tarred by these customers? Let us first understand who these customers really are. A lot of people shop only when there are heavy discounts; do we categorize all such customers unwanted? What are some of the criteria of putting a customer in the blocked list?

The following are some attributes which are common among the low-rated customers:

  • High Cancellation and Return Rates

Every return is a huge cost, not just in terms of logistics, but also merchant satisfaction, payment cycles, customer care operations and the entire working capital management. Companies have had customers with rates of cancellation as high as 100%, and over 50-60 orders. A lot of these customers are simply window shoppers, backed by the free shipping and ‘no questions asked’ return policies. Worse still, when they return the product, the product is often short- shipped/broken/damaged. Companies are better off not having such customers. However, care must be taken to not block any genuine customer in the process. For example, a customer may have a 0% return rate in some category, and a 100% return rate in some other. In such cases, it is worthwhile to check with the customer on the reasons of return in the latter, before blindly categorizing the customer as low rated.happycustomer

  • A Ticket For Every Order

Believe it or not, most e-commerce companies have customers who have problems with just about everything. And yet, they continue to shop! Some customers write to customer care almost every day, and have even appointed their secretaries to coordinate with customer care departments on their behalf. The Internet is full of stories of how some call centre agents have had to change their personal mobile numbers because such customers get their numbers and distribute it on social spaces – giving the executive sleepless nights as a result.

  • Problem of Fakes/Empty Parcels/Short Product Received

Some customers take advantage of social networking websites and, regardless of whosoever’s mistake it might be, report fakes for every order delivered. And yet, they continue to shop.

  • Resellers

This is a huge mess for any marketplace today. Merchants avail the heavy cash-back offers, and buy back their own products at lower prices. These merchants go to the extent of having products shipped to their friends’ places to avoid getting caught. Resellers need to be not just blocked, but heavily penalized as well.

  • High Payment Gateway Failures

These are potential fraud cases of imposters trying to use someone else’s card to transact. An abnormally low payment gateway success rate should raise this alarm, and companies need to devise mechanisms to authenticate the buyer. Such fraudulent transactions lead to consumer dissonance, and can potentially be ripped apart on various social platforms.

  • Exploiting Bugs in the System

Recently, there was a bug discovered on a prominent e-commerce site, where customers were getting both the product and refund. Before the company could fix this, the news went viral and a lot of people took advantage and placed orders. Consequently, the company blocked those users, sending out clear signals that such behaviour would not be tolerated.

A well-tuned customer rating plan can go a long way in promoting the right offers to the right customers, thereby leading to a better mutual experience.

Having identified a customer as a customer-worth-keeping or blocking, care must be taken to not offend the customer in the process. Companies should send out gentle, but firm, communication to the customers informing them of their low ratings, and suggesting areas of relationship improvement. It is akin to putting customers on a performance improvement plan rather than blocking them straight away. Companies should not be lenient with such customers only because they are making noise on a social platform. Rather, clear cut logic should be communicated to them on the same platforms.

And finally, if somehow all e-commerce companies are able to come together and form a common platform for customer rating, the amount of data that would be churned can make such predictions more reliable and create a win-win ecosystem for all. A well-tuned customer rating plan can go a long way in promoting the right offers to the right customers, thereby leading to a better mutual experience.

Disha Chhabra is the author of best-selling books, “My Beloved’s MBA Plans” and “Because Life is a Gift” and the co-founder of the Delhi Chapter of ‘Pick-a-Fight’, an NGO. She is an alumnus of IIM Calcutta.

Posted by The Indian Economist