Case Story: The Returns Dilemma That Unlocked 4% Net Margin
The Challenge
For many businesses, product returns are simply a “cost of doing business.” A successful consumer brand was grappling with a familiar problem: a high and rising volume of customer returns that relentlessly eroded its profitability. Their streetlight, fixed firmly on financial reports, clearly showed the escalating costs of return shipping, restocking, and administration. The conventional wisdom was that this was just an inevitable part of online retail, a loss to be absorbed or mitigated by tightening return policies. But what if those returns were actually a signal of something more profound?
The Investigation Beyond the Streetlight
We recognised that simply managing returns was treating a symptom, not curing the disease. Our approach was to reframe the challenge: instead of viewing returns as a logistical problem, we saw them as the final, painful symptom of a flawed customer journey. We deployed the Organisational CT Scan not to count returns but to understand and eliminate the root causes that prompted them in the first place. Crucially, this diagnostic didn’t rely on expensive software or complex predictive models; the initial hypothesis was developed and validated using a simple spreadsheet, demonstrating the power of observation and curiosity.
The Revelation
The Brand Was Driving Its Own Returns: The truth was profound: the company itself, unintentionally, was the most significant driver of its own returns. The Organisational CT Scan meticulously identified several critical, yet previously unseen, points of friction – pieces of “bad flora” poisoning the Customer Grove before customers even considered a return. Alluring website descriptions created a subtle, unnoticed expectation gap regarding material, fit, or colour that the actual product couldn’t meet. Sizing charts were wildly inconsistent across different product lines, leading to predictable customer frustration and “bracketing” (ordering multiple sizes with the intention of returning some). Furthermore, the returns process itself, designed for the company’s cost efficiency, was confusing and time-consuming for the customer, adding a final negative experience to an already disappointing purchase.
The Solution
Improving the Customer’s Reality: Once these verifiable truths were illuminated, the path to a healthier Organisational Homeostasis became clear. A set of simple, targeted steps was implemented: clarifying product descriptions with more realistic photography, creating a unified and easy-to-understand sizing guide (the problem wasn’t the customer; it was the product), and streamlining the returns process to make it genuinely user-friendly.
The Verifiable Impact
The results were immediate and transformative:
48% Reduction in Returns: Customer returns were dramatically reduced by 48%.
4% Increase in Net Operating Margin: This directly added 4% to the group’s net operating margin through dramatically reduced distribution and management costs.
This was achieved not through negative interventions that punished the customer but by fundamentally improving their overall experience and rebuilding trust.
This case powerfully illustrates a key Maxim of the Maze: Patching Symptoms Keeps the Real Sickness Hidden in the Dark.
A product return is rarely the end of a transaction; it is often the most honest feedback a customer will ever give you about the disconnect between your promise and their reality. By daring to look where others don’t, we can transform a “cost of doing business” into a significant source of verifiable value.
