Articles

Many companies see customers’ product returns as a major inconvenience and an eroder of profits. But recent studies have begun illuminating the potential benefits of allowing customers to return products with impunity. This research finds that when a company has a lenient product-return policy, which allows customers to return almost any product at any time, customers are more willing to make other purchases, thereby raising the company’s revenues from sales. The authors’ own research extended these studies by exploring the trade-offs between the costs of product returns–particularly when customers deem such experiences satisfactory–and their long-term benefits to the company. Analyzing six years of purchase, product-return and marketing-communications data from “Company 1?–a large national catalog retailer that sells apparel and accessories–they confirmed that ignoring product return behavior, or even trying to discourage it directly by not marketing to customers who return products (such as by not sending them catalogs), would be a mistake. In fact, managers should embrace customers’ product-return behavior and offer them a satisfactory experience. In a field experiment with a second catalog retailer, “Company 2,” which sells footwear, apparel and other accessories through the Internet and mail-order catalogs, the authors found that under a lenient product-return policy, customers’ purchases, induced profits and referrals were greater than under a strict policy (which discourages and limits product returns). These measures could be raised even further through a catalog-mailing strategy that takes into account the expected future profits from each customer and the relationship between purchases and product-return behavior–i.e., through an optimal allocation strategy.

Research suggests that people will spend more freely if you first help them feel more virtuous.

Systematizing the analysis process should produce more gain and less pain when forming strategic partnerships.

Esther Baldwin of Intel explains how IT tools, applied to the innovation process, can fuel business growth.

Some approaches to achieving innovation work well together — but some don't.

Managers can gauge their company's customer focus by posing a set of five specific questions.

Teams that fight wildfires have much to teach business managers about preventing complex and dynamic problems from spiraling out of control.

User-generated content platforms, open source software, crowdsourcing and knowledge markets these are all possible only because of the "social web," the interlinked virtual universe that to so many executives seems to offer the irresistible promise of providing something--ideas, work, decisions--for (almost) nothing, if only they could manage it right. Managing it right means understanding that even though the new platforms are all about harnessing crowds and communities, in the end those crowds and communities are nothing but a sum of individuals. And your company's social web efforts will succeed only to the extent that you are able to attract good individuals, motivate them to perform good work, and empower them to get to know and trust one another enough to collaborate toward the end goals of the community. The question is, How do you do that? The answer: by capitalizing on the motivational power of in reputation--that is, by designing and building an online reputation system that triggers and nourishes the kind of web community that will serve your company's needs. Using examples such as Amazon, eBay, Epinions and Yelp, the author describes how design choices of a reputation system can profoundly affect a community's culture, making an otherwise collaborative and cordial community into a competitive and even combative space.

An interview with Jim Fister, a lead strategist for Intel Architecture Digital Enterprise, by editor-in-chief Michael S. Hopkins. "The way that the younger workforce was educated, the way that they were trained and the way they want to come into the workforce is working naturally in a collaborative fashion. And they're doing it in ways that those of us who really were trained along the individual lines just don't understand. But we do understand the results of that, and by encouraging that collaboration, rather than trying to force people back through the exact same paths that we learned to become IT professionals or to become management professionals, if we can manage to actually adapt to their path, rather than having them adapt to our path, we're going to get results much greater, much faster, with a tremendous amount more passion, than we would have gotten otherwise."

An interview with Andrew McAfee, a principal research scientist at the MIT Center for Digital Business, editor-in-chief Michael S. Hopkins. One of the single biggest changes that I see coming is when you have this unbelievable amount of horsepower and a mass of data to apply it to, that lets you be what I would call a lot more scientific about things. You can be a lot more rigorous in your analysis. You can generate and test hypotheses. You can run experiments. You can adopt a much more scientific mindset. I think if you don't try to migrate your company and your decision-making in that direction, you're missing out on a huge opportunity, and you had better hope your competition is also not moving in that direction. Because when you compare scientific to pre-scientific approaches, there's one clear winner over and over.