Allow me to chime in. I am an active consumer and at the same time I manage the e-commerce site for my place of employment, so I’d like to think that I can see things from both sides’ POV.
Obviously, the quicker a customer inquiry is answered, the better it is. I especially like the convenience of Live Chat. While it is very easy for a customer to say “hire more people”, it is really not as easy as a customer may imagine, especially for a small company. Among other things, the cost needs to be justified and the new hires need to be trained. Having said that, a vendor needs to realize that CS is second to – sometimes as important as - product quality in determining the company’s success or failure. So, no matter how many legitimate reasons you have, you’d better get on with it ASAP.
I have learned in my career that 1 negative review is more than enough to wipe out 10 positive reviews! 1 dissatisfied customer will cost you 10 potential customers! So, a lot of times, you simply needs to appease a dissatisfied customer even though a) it’s not your fault, b) it’s going to cost you and c) you suspect that the customer is trying to take advantage of you. It’s painful for a small company, I know, but at the end of the day, it’s worth it. Trust me, the $10, $20 or so you may lose in an exchange/return not only is worth the good word-of-mouth that is going to help you – consider it the cost of an advertisement – but also save you from the bad word-of-mouth that is going to hurt you – also consider that it saves you the time from having to defend yourself in forum like this one and instead you can use the time to concentrate on growing the business. Trust me on this. There is already one person posts in this thread that s/he will not buy from Halo b/c of the review. God know how many more people who think the same but don't bother to post. And each one of these people has the potential to tell friends and families the same. It's exponential.
What my company does is to set a max. $ amount we can live with for “no argument” return or exchange. Both the $ amount and the policy is solely internal that are not revealed to the public. The $ amount is based on the cost to us, not the price to the customers (two different products may be priced the same at $10 but a high-margin item may cost the company only $2 whereas a low-margin item may cost the company $7). We keep a good record of return/exchange and we red flag any customer who consistently complaints and asks for return/exchange. For those few people we would deal with differently in other diplomatic ways.
Hope this helps.
