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Sending the shoes back? How about this lovely gift card? Cross-selling can help retailers avoid lost revenue from returns

Once we’ve chosen to buy something, we tend to consider that money as already spent or gone, also called “loss booking.” If we decide we want to return the item, retailers can take advantage of that tendency by giving customers enticing options to spend their refund on something else, instead of getting their money back.

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It’s become so darn easy to order stuff thanks to the miracles of online shopping. But it’s not so simple on the retailer end, especially when more than 16 per cent of those sales are later sent back. In the U.S., that adds up to a staggering $816 billion in lost revenue.

Cross-selling can help, say a pair of researchers. Their experiments show that once we’ve chosen to buy something, we tend to consider that money as already spent or gone, also called “loss booking.” If we decide we want to return the item, retailers can take advantage of that tendency by giving customers enticing options to spend their refund on something else, instead of getting their money back.

In a nutshell, “it hurts less to spend money refunded from a product return than other money, because you feel like you’ve already lost it,” says researcher Chang-Yuan Lee, an assistant professor of marketing at the University of Toronto’s Rotman School of Management.

Prof. Lee and his colleague Carey K. Morewedge from Boston University showed this over and over again in a series of experiments.  Participants were more likely to buy an item when they were paying for it through refund money compared to funds they hadn’t already spent. This occurred even in cases of unexpected money – it was still easier to apply a refund to another item than to spend windfall funds on it, such as imagined lottery winnings or tax refunds. And study participants were willing to accept an item outside their original product category – a $100 gift card for a sports shoe company after the return of a $90 grocery item.

There’s a catch though. The shopper has to psychologically mark the initial spend as lost, something that does not happen when they expect to ask for a refund at the time of purchase. Study participants who bought two pairs of shoes in different sizes, expecting to return the poorer-fitting pair, were not so likely to turn around and immediately apply the refund to something else offered.

Retailers are already on to cross-selling’s value. The researchers cite the online exchanges-first platform Loop Returns which claims to have retained nearly 29 per cent of potentially lost sales revenue for online merchants by offering consumers alternative product options before initiating a refund.

While consumers could be discouraged from making returns by being charged extra fees, that leaves a bad taste in their mouth and previous research has shown they may take their business elsewhere.

“Our proposed cross-selling strategy offers a solution for retailers to minimize revenue loss without imposing significant costs on both the retailers and consumers,” says Prof. Lee.

The study appears in the July issue of the Journal of Consumer Psychology.

Strategies

‘Ugh, not that song!’ Background music impacts employees

When background music at a workplace is out of sync with what workers need to do their jobs, it can affect their energy, mood – and even performance.

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Have you ever gone to a store or a restaurant where the music was so annoying that you walked right out? Now imagine what it must be like for the employees.

In a study, researchers found that when background music at a workplace is out of sync with what workers need to do their jobs, it can affect their energy, mood – and even performance.

“Music that doesn’t fit what an employee needs to feel energized, manage emotions, and focus on task can have a real negative impact,” said Kathleen Keeler, co-lead author of the study and assistant professor of management and human resources at The Ohio State University’s Fisher College of Business. “We found that a music misfit can lead employees to feel more fatigued, have trouble focusing, and not really enjoy being at work. And that in turns prompts them to engage in behaviors that can harm the organization.”

The problem is worse for people who have difficulty screening out background noise from their environment, the study found.

It is an understudied issue, Keeler said.  About 13.5 million people work in occupations where background music is common. But the music is often chosen with only customers in mind.

“It is a mistake for managers to assume that music doesn’t affect employees,” Keeler said.

The study was published online in the Journal of Applied Psychology.

Study in focus

The researchers conducted two studies. One study involved 166 full-time workers who participated online. Before they began, participants rated how much they needed four features of music: volume, speed, complexity and emotional intensity. The participants then listened to one of two playlists while they conducted a creativity task.

One playlist was upbeat, happy pop music with moderate complexity. The other was slower, more somber music played at a lower volume.

After completing the task, participants rated how much the music they heard fit their needs for volume, speed, complexity and emotional intensity.

Results in focus

The findings showed participants experienced a negative impact if the characteristics of the playlist they listened to was out of sync with what they said they needed. Those who had a music misfit showed a decrease in pleasant feelings and emotions and also more cognitive depletion – a feeling of mental exhaustion, Keeler said.

The problem was particularly acute for people referred to as non-screeners. “Stimulus screening” is the ability to focus on one sensory input at a time. Non-screeners have difficulty doing that and – in this case – were unable to ignore the music in the background while they concentrated on their task.

“The bad effects of music misfit are worse for those who are non-screeners,” Keeler said. “They have difficulty blocking out the music and so they feel less positive emotion and feel more depleted after listening to the music that was out of sync with what they needed.”

The second study was a real-world sample of 68 workers in health care offices, retail stores and dining halls where background music was a feature of their everyday work life. Participants completed three email surveys every day for three weeks about their musical needs, the music they heard, their moods, cognitive depletion and various actions at work.

The findings confirmed results of the first study and added another wrinkle: Music misfit had an impact on job performance.  Participants were more likely to act in ways that hurt the company – and less likely to do positive things – on days when they felt out of sync with the music they heard.

Music affects actions

Negative actions could include working more slowly, talking negatively about the workplace with other employees, and pilfering office supplies. Positive actions included helping a fellow worker on a project that was outside their direct responsibilities.

“It can affect the bottom line of companies if their employees are not being productive because they are being drained and distracted by the music they hear all day,” Keeler said. “Their performance suffers.”

The results suggest that employers need to take into consideration the musical wants and needs of their employees.

“Employers should try to strike a balance between making sure their music appeals to both customers and employees, because this is not a trivial matter,” Keeler said.  “If their employees aren’t happy, that is not going to be good for the business.”

Employers can also ensure there are places in the workplace where employees can escape the music during their breaks. In addition, they could invest in earbuds using smart technology that allows wearers to hear conversations from customers while screening out some background noises, including music.

And while this was not a focus of this study, the results also suggest that workers may be happier and more productive if they are allowed to listen to their own music when appropriate.

Let them listen to their music

“I know some managers are reluctant to allow employees to listen to their own music, but our research suggests that there are a lot of benefits, including productivity, engagement and well-being,” she said.

Harshad Puranik of the University of Illinois-Chicago was co-lead author.  Other co-authors were Yue Wang of the University of Illinois-Chicago, and Jingfeng Yin of The Hong Kong, Polytechnic University.

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Strategies

Crucial electrical safety advice for customers 

Before getting started on outdoor projects, it is important to be aware of the electrical safety hazards you may encounter.

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Spring is about to arrive, and the longer days will inspire business owners to get outdoor projects underway. But before getting started, it is important to be aware of the electrical safety hazards you may encounter.

“Starting on outdoor projects is a great way to welcome the warmer weather, but it’s crucial to be aware of potential electrical hazards at home,” said Tim Frankenberg, fire safety engineer for the St. Louis-based Ameren Corporation. “A little prevention goes a long way in keeping your family safe.”

The St. Louis-based Ameren Corporation recommended four electrical safety hazards to avoid this spring:

Electric equipment near water

Water and electricity don’t mix, so a great rule of thumb is to keep electric equipment at least 10 feet away from wet areas. You should also plug into ground fault circuit interrupters (GFCIs), which are designed to shut off the power as needed to prevent a shock. These are typically found in kitchens, bathrooms, garages and outdoors. It is highly encouraged that GFCIs are tested monthly. 

Underground utilities

You can disrupt utility service, including electric, natural gas and more, and even put your life in danger by failing to have underground utility lines clearly marked before digging. Plan the simple do-it-yourself projects that may seem small, including planting trees or installing a mailbox.

Overhead power lines

Stay clear of power lines and wires when trimming vegetation, raising ladders and performing outdoor home maintenance. Always assess your surroundings while trimming or working in your yard or simply call a certified professional to safely handle the work. Remain at least 10 feet away from any overhead power line near your home. 

Indoor electrical cords and electronics for outdoors

Before plugging into an exterior electrical socket, double-check that your cords, lights or fans are rated for outdoor use. Look for labels on packaging that clearly mark them as suitable for outdoor use. Also, avoid running cords through door or window openings where they can be damaged, and pair them with GFCIs instead. 

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Strategies

How your business can cut costs related to plumbing

Business owners should take proactive measures to identify and fix plumbing leaks heading into the warmer months.

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Business owners should take proactive measures to identify and fix plumbing leaks heading into the warmer months.

“Warmer temperatures are headed our way as spring begins to take hold,” Levi Torres of High 5 Plumbing, Heating, Cooling & Electric said. “Pretty soon, air conditioners will stay on a little longer and energy bills will begin to rise. One of the best ways to offset those costs is to check your plumbing for any leaks that could be increasing water usage.”

According to the EPA, people wastes nearly 10,000 gallons of water every year due to unknown leaks in the home, offices, et cetera. In addition, 10% of establishments waste 90 gallons or more per day.

To help your business cut costs related to plumbing, the experts at High 5 recommend the following tips to help recognize plumbing leaks:

  • Check the flapper in the toilet periodically to ensure it isn’t old or worn out. This can cause the toilet to silently leak thousands of gallons of water a year or cause it to flush on its own. Replacing the flapper can be an easy, cost-effective way to prevent toilet leaks.
  • Inspect the washers and gaskets on your faucets. Old washers can be a primary culprit for leaky faucets, causing a home to waste more than 3,000 gallons per year.
  • Check the showerhead for frequent dripping after usage. A showerhead that drips 10 times per minute can waste over 500 gallons per year. Simply tightening the connection or replacing the showerhead can be a cheap option to prevent leaks.

“While some simple leaks can be prevented by replacing small parts, it’s always important to call a licensed plumber if you suspect you have major leaks inside your home,” said Torres. “Leaks behind a wall or with a water heater can be much more complicated and need professional attention. If left untreated, they can cause thousands of dollars worth of damage. Never leave a leak left untreated.”

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