Online customer confidence

By: Aengus Collins

Date: 7 April 2010

UK shoppers spent £38 billion over the Internet last year, almost 10 per cent of their total retail spend for the year. That’s double the European average, according to a recent report by the Centre for Retail Research.

But if you think that suggests the nation’s consumers are a savvy, confident bunch you might be wrong. Earlier in March, a government survey also revealed that:

  • 77 per cent of customers aren’t aware of the differences between their online and high-street rights
  • 60 per cent are less likely to return goods bought online than goods purchased on the high street.

What are we to make of these findings? First, let’s clear up the key difference between distance-selling and bricks-and-mortar customer rights – the cooling-off period – because it’s one that vexes retailers as well as customers. Then we can look at how businesses should deal with customer confusion – and the benefits that can bring to sales.

Clearing up the cooling-off provision

When a customer buys online, they get a seven working-day window during which they can cancel the contract for any reason, including just changing their mind. Broadly speaking, this cooling-off period starts on the day the customer receives their goods, or, for services, the day the contract is concluded.

The rules aren’t quite that simple, though. Various admin details and types of goods can affect, or end, the customer’s rights to a full cancellation and refund. For example:

  • a customer wishing to cancel must tell you so in writing (fax or email count) – a phone call isn’t enough
  • you must give customers certain written information about their online contract – any delays can extend their cooling-off period by up to three months
  • various goods don’t qualify – these include items you’ve personalised for a customer, perishable goods (eg food) and audio-visual products that have been opened
  • if the customer agrees that performance of a service should begin before the end of the cooling-off period that would normally apply, then the right to cancel ends when the service starts.

Building trust out of confusion

Many retailers’ response to customers’ lack of knowledge about their cooling-off rights will be something along the lines of “Thank God for small mercies”.

It’s tough times out there and if customers aren’t cancelling orders, then so much the better. At the end of the day, online retailers are required to comply with distance-selling rules, not to provide educational bulletins for customers on them.

True enough. But there’s a bigger picture here.

Surveys show that customers are still wary about shopping online. Trust remains at a premium. So there’s competitive advantage to be found by businesses that outperform their peers at generating it.

Being upfront and accommodating about your rules and procedures about cancellations are an important part of building online trust. Customers want to know you’re not going to suck them into a black hole of non-existent customer service if it turns out they change their mind about a purchase.

Look at Amazon, the self-styled “world’s most customer-centric company”. They bend over backwards to inform customers of their rights and to make cancellation as easy as possible. In doing so, they’ve achieved something close to profit alchemy – turning customers’ lack of knowledge into a way of generating the trust that online businesses crave.

Not for Amazon the dubious benefit of having confused customers hang on to a few items that might otherwise have been returned as cancellations. Instead, they’ve bet on trust and are selling products by the shedload that might otherwise never have been ordered.

Law Donut

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