Question about % of returns

> Why does the RATE of return rise when volume
> rises? I can understand why the NUMBER of
> returns would rise but not why the rate
> would.

Eve:

Sticking with the example given in the thread below (an audio tape set - I am changing the topic though)...

An audio tape set for fossickers advertised in a few fossicking magazines and newsletters. A niche market being targeted.

Take the same ad and use it outside of the niche and you are now getting people not in that niche. Some will be curious and buy. And then return. Others will be curious and buy and keep the product. And others will buy just because it is something to buy :o)

Because your marketing is now aimed at people outside of the niche, the overall number of sales will increase. And seeing as many of those people aren't "into fossicking" a higher percentage of buyers will return the product.

Another element that needs to be considered and monitored the whole time is your ROI.

An increased number of sales may end up giving an increased rate of return. But how does that work out with the money spent on advertising?

The mass market publications go out to more people and an ad costs more to run. So you automatically need a higher response to cover ad costs. Factor in a higher product return rate and your "ad dollar : money return" ratio will drop.

If you stay in your niche publication and change the marketing to entice more people to buy, then once again, people who normally wouldn't buy, do. As the product was not designed for them, the product return rate should increase.

Keep an eye on your bottom line while this happens. The last thing you want is to sell more than normal, return more and go out backward on product restocking and spoilage costs.

If you had previously been selling 100 units per month with a 3% return, you were profiting from 97 units. Should a change in marketing (headline, copy, price, guarantee, whatever) attract more buyers who normally wouldn't have bought you may increase your sales to 110 per month. A 10% increase. If returns then jump to 10% (11 units) you are profiting from 99 units sold and kept. You are now two more units better off. BUT, you are now restocking 11 units (some of which will be no good due to spoilage) instead of 3 and that costs you more time and money while you are only increasing "real sales" by two. You're handling four times the return for only two more sales. Is it worth it? You have to do the math to figure that one out.

Michael Ross


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