It’s no surprise that notifying consumers directly about product recalls is the most effective way to get dangerous products out of circulation. What is surprising is how much more effective direct notifications are, and why manufacturers and retailers don’t use them more often.
A study last year by the Consumer Product Safety Commission (CPSC) found that recalls which employ direct notifications have a healthy response rate of about 50 percent. Compare that to, say, the more “cost-effective” approach of using press releases to spread the word, where the response rate is a measly six percent.
When you consider all the factors that influence response rates of product recalls – including how long the product has been around, how often it’s used, price, etc. – direct notifications are the single greatest determiner, research has found.
Why some manufacturers and retailers facing a recall fail to employ direct notifications could be the challenge of collecting the necessary contact information from consumers, such as an address, phone or email. They have been largely dependent upon product registrations, both mail-in and online, which many consumers eschew.
Some U.S. government agencies have tried to help bridge the direct-to-consumer notification gap by providing a free notification clearinghouse for all kinds of recalls. Consumers simply signup at Recalls.gov and select which kind of recall notifications they would like to receive from the CPSC, Food and Drug Administration (FDA), U.S. Department of Agriculture (USDA) and the National Highway Traffic Safety Administration (NHTSA).
But, as with filling out product registration forms, the government notification service relies on consumers to make the effort to sign up.
To break through this consumer inertia, some manufacturers have tried other creative techniques to get people to opt-in. Consider the case of a drug recall. Getting quickly refunded for a returned product is a powerful motivator. At the same time, retail pharmacies play an essential role in facilitating the recall process.
To that end, Sedgwick has worked with retail pharmacies to offer a proprietary Fast Pay program that delivers the fastest payment for returned products in the industry. The program analyzed all retail pharmacy returns against the most recent manufacturer policies on file and ensured that all items are processed. The Fast Pay returns program allowed pharmacies to bypass manufacturers’ lengthy credit reconciliation processes and receive direct payment in the form of a check that is mailed within 12 business days. This approach saved time and resources by eliminating the need to track manufacturer credits over periods that can stretch beyond two years.
Some manufacturers have tried adding a small incentive, such as giving respondents a free accessory to accompany the replacement product, or a coupon for a future purchase attached to a refund. This incentive approach has the added bonus of improving customer loyalty at a time when the brand is vulnerable to ill will.
Manufacturers should also consider incentivizing the product registration step itself to boost response rates. These incentives could include a simple product accessory, a discount on a future purchase, free shipping or other cost-effective enticements.
Warranty registrations are another potential avenue. Many consumers who wouldn’t bother filling out a registration form are eager to make sure their product is warranty protected. Those who opt for an extended warranty plan provide the contact information necessary for direct notification recalls.
The same holds true for repair, maintenance and service requests. These points of customer interactions often include capturing contact information that can be used to notify customers.
Loyalty programs are also good incentives. Some retailers now use information gathered during sign-up to notify customers of product recalls.
Newsletters offer a similar channel. While the information captured in newsletter subscriptions doesn’t link the consumer to a specific product, they are a good way of reaching customers already loyal to the brand and, thus, more likely to have purchased a recalled product.
Whatever the approach, manufacturers and retailers need to do a better job at being prepared to reach consumers directly when a recall strikes. It often makes sense to partner with a recall specialist who has expertise in the difficult steps of preparing the consumer data for notifications, facilitating the outreach and call centers, and managing the return processes.