June 2012 – Monthly Theme – Returns & Completions

1. June 2012 – Monthly Theme – Returns & Completions • Note to LCM: This deck has four segments intended to be shared with your delivery teams over a four week period. • Week One reviews the PredictModel including the following Vital Behaviors: Preparation, Rapport, Explanation, Demonstration, Information, & Concerns Addressed • Week Two discusses Returns & Completions • Week Three discusses Avoidable Returns • Week Four discusses the Predict Vital Behavior – Temperature Survey • Review all slides before presenting. • Review supporting materials/documentation prior to your presentation.

2. June Monthly Theme – Returns & Completions • The purpose of the Monthly Theme is to assist ourDelivery teams in gaining a better understanding of the products that they deliver. This also supports the expectations of our customers who want the delivery teams to be subject matter experts on the products they deliver. • Suggested Vital Behaviors from the Predict model and a Shiftstarter module have been included. • Recommendations for a Monthly Theme Presentation: • LCMs should meet with MDO Mgrs in advance to review/discuss • Provide products as visual aids • Print out copies of the slide deck and supporting materials (such as product information) and post in the stand up area for teams to review after your presentation. • Use this time to promote improving the customer experience.

3. June Monthly Theme Returns - Completions & Vital BehaviorsWeek One The Vital Behaviors that PREDICT Legendary Customer Experiences in Home Delivery June 2012

4. Predict Vital Behaviors Overview • Every delivery provides us with opportunities to provide our Customers with Legendary Customer Experiences in Home Delivery. On the following slides, we will review the following Predict Vital Behaviors for delivery: • Preparation • Rapport • Explanation • Demonstration • Information • Concerns Addressed

5. Identify Preferred Delivery Time Windows for customers in order to make these a priority throughout the day. • Pre-Call every Customer on your Route in before/during Load-out • Determine if any deliveries are likely to require additional accessories and ensure the accessories are loaded on the truck before departure (e.g., Unsold Hook-up during Delivery Event). • Identify and resolve any issues with the Sears team during the load-out process. • Discover deliveries marked “pre-inspect” or damaged boxes so they can be inspected during load-out. • Note any cases of multiple delivery attempts or RORs that may signal a frustrated customer. • Review the products for the day and begin planning what you will tell customers about their new products.

6. Contact customers before arrival when running behind schedule and work with the customer to resolve issues. • Stand a few feet away when the customer opens the door and smile while greeting the customer. • Look for any potentially negative reactions of customers to your appearance and ask colleagues for feedback to ensure you present a professional appearance to customers. • Discuss multiple delivery attempts with the customer right away to understand the customer’s expectations for the delivery. • Greet the customer by his or her name and tell the customer you are from Sears Home Delivery. • Engage the customer in friendly conversation, but taking care to avoid discussing anything that a customer could perceive as uncomfortable or inappropriate. • Avoid any conversations with other members of the delivery team that might make a customer uncomfortable (e.g., speaking to the team in another language in front of the customer that he or she can not understand).

7. Measure the opening to the basement and explain to the customer why you will need to remove the door. • Describe any potential for causing damage as well as any existing damage in the home to the customer. • Show the customer the new packaged Accessory Kit and explain how it helps protect the customer. • Provide the customer with an estimate of how long the delivery will take and explain the reasons why. Always walk the path

8. Offer to clean the area or allow customer to clean the area occupied by the old appliance. • Offer to remove refrigerator contents if not already removed before taking away the old product. • Ask a customer to look at the product and confirm that it has been leveled to her satisfaction. • Ask the customer to read the temperature reading on your heat sensor. • Tell the customer what you are doing as you test the features of a new product. • Ask the customer to try using certain features of the product herself to ensure they are functioning properly.

9. Review Owner’s Manual with customer • Explain that a new sound, noise, or smell is normal for the new appliance • Instruct customer on best way to clean their new appliance, such as a new stainless steel surface • Use of special products, such as HE detergents • Explain water saving features of new washing machine or dishwasher

10. Apologize for any additional service recovery stops / RORs. • Politely explain the reasons why you can not perform any services and alternative options for the customer. • Face the customer when speaking and watch and listen for signs the customer is concerned or upset. • Ask a customer if there is anything else you can do to ensure she is satisfied with her delivery. • Explain to a customer steps she can take if you are not able to fully address her concerns. • At all times, avoid any actions that might appear to be soliciting a tip from a customer. • Identify any damage that may have occurred during the delivery and explain the steps you will take to fix the damage or resolve the issue to the customer.

11. Resources • Predict Model Video • Predict Model Poster

12. Overview of June Monthly Theme • In the coming weeks we will review the Predict Model and Returns & Completions. • Week of June 4th – Predict Model • Week of June 11th – Returns & Completions • Week of June 18th – Avoidable Returns • Week of June 25th – Predict Model Behavior – Temperature Survey

13. June Monthly Theme Returns & CompletionsWeek Two June 2012

14. Returns & Completions • Impact of Products Returned to Sears • Customer Satisfaction • Potential loss of customer who decides to go elsewhere for their product & delivery • High cost of returned goods

15. Cost of Returned Product • Impact of Returns • Over 270,000 returns in 2011 • Over $57 million dollars in costs to Sears • Impact of Damage RORs • Over 121,000 damage RORs in 2011 • About $27 million dollars in costs to Sears • Average cost per Return is about $220 • Costs of processing returns, 2 trips, handling, fuel, etc. • The $$$ costs above do not include additional costs related to product depreciation and Outlet markdowns that can add about another $200 in Return costs per item • Total costs of Products Returned to Sears exceed over $400 per item

16. Before & During Loadout • Pre-Call every Customer on your Route in the Morning before Load-out • Verify product type & description, color, Fuel type (gas or electric), door swing, and if customer is ready • Verify time window and best phone number to call them later • Verify any special issues related to getting to or finding their house • Ask additional questions if necessary based on your knowledge of the area • Review supplemental manifest for additional information

17. Before & During Loadout • Open and Inspect Products that have: • Torn / Damaged Boxes • Crumpled Corners • Compressed foam or Corner Posts • Inspect Every Item to be Delivered for an Outlet Store • Use Blankets and Boxes to cover the products • Shrink Wrap with Corner Posts if Possible • Ensure there are no sharp edges or protrusions on truck that might tear packaging or bedding merchandise • Ensure bedding is stood on end where the packaging has the thickest gauge plastic “booting” on one end, typically has blue or green colored packaging • Never drag any merchandise

18. At Customer’s Home • Call customer before arrival at customer’s home • Walk the Path • Verify Electrical Cords / Wires are hooked up correctly • Verify there is “Good” power at the outlet (use electrical tester) • Show customers the product controls • How to set temperature for the refrigerators • How to start and run other products • Make sure water source is available • Use water line tester for ice-maker • Test hot and cold lines for washer • Test all burners for the ranges

19. At Customer’s Home • Make sure there are no leaks • Check before and after you test the product • This means drain hoses too • Run product through complete test cycle (with customer if possible) • Take out all shipping bolts • Do Not leave product at customers home if an exchange is likely • Do not influence the customer’s decision to keep the product or return it • Delivery team should wait in the home until the decision is made and comply with decision

20. Resources • Remember to use available tools such as • 1-800-MANAGEMYHOME

21. June Monthly Theme Avoidable ReturnsWeek Three June 2012

22. Avoidable Returns • The Avoid the Return Process has been in place for several months now and continues to be an important focus for Delivery as a whole, including the MDOs, Delivery Teams, and CCN. • Approximately 21% of all Returns have been identified as “Avoidable” returns. • It is very important that delivery teams do not leave product “to be returned” in the home but to bring the product back to the MDO on the same day as the delivery attempt. This will help to reduce unnecessary markdowns for SHC.

23. Avoidable Returns • All products refused by the customer on day of deliver must be put back on truck and returned to the MDO: • Picked Wrong – wrong color, brand, item • Ordered Wrong – selling error • Damage – concealed or quality defect • Won’t Fit • Refused items should not stay in the customer home. • Delivery teams and CCN associates must proactively inform the customer that the refused item(s) will return with delivery team. • Delivery teams must call in all exceptions while at the customer’s home. No control code will be given if delivery team leaves an item in the home in these situations. • Carrier managers / MDOs will be contacted if there is any question about the policy. • The only exception is if the customer requests to keep the merchandise in the home for “emergency” or necessity type situations. (i.e. needs refrigerator for medicine).

24. Avoidable Returns • Delivery Teams must understand that the wrong or damaged product must be returned to the MDO the same day as it is delivered except on very rare occasions (emergencies). • Teams must refrain from making any statements to customers about keeping or not keeping the merchandise or the possibility of receiving an adjustment for damaged merchandise. • Teams need to simply apologize for any inconvenience and refer the customer to the CCN agent for resolution.

25. CCN Scripting for Avoidable Returns The script that CCN now uses when the customer receives wrong or damaged merchandise for the following reasons: • Picked Wrong – wrong color, brand, item • Ordered Wrong – selling error • Damage – concealed or quality defect • Won’t Fit • “Mr. Mrs. __________, I understand your frustration and apologize for the trouble you are having today. I want to let you know that the delivery team will take back the item today.” • The CCN agent will discuss the specific next steps with the customer.

26. June Monthly Theme Predict Vital Behavior – Temperature SurveyWeek Four June 2012

27. PREDICT – Temperature Survey • The Temperature Survey is one of the Vital Behaviors from the Predict Model and is also one of the topics covered by a Shiftstartertrainingmodule that managers facilitate to their delivery teams.

28. Predict – Temperature Survey • Show the Temperature Survey video clip from the PREDICT model video • Review & Discuss the Temperature Surveyusing Shiftstarter materials

29. Temperature Survey Summary • Tell the customer that Sears values their feedback. • Explain to a customer that they may be receiving an automated survey in a few days. • Explain the temperature survey to the customer and ask them to complete the survey. • Ask the customer to complete the survey without pressuring the customer to respond in a certain way. • Avoid any negative comments about previous service team, other customer service teams, or the company.