This blog is part of a series about how and why retail brands must “earn the customer” – their trust and loyalty – to remain competitive in a digital world. See other posts, including Earn the Customer with Unique Brand Content on Your eCommerce Site and Earn the Customer with Customer-Centric UX Design.
If your brand is committed to being customer-centric, then every interaction in the customer journey should merit close attention, including post-purchase experiences like returns. Although your gut reaction may be to focus on revenue-generating areas of your business versus profit-sucking returns, it might be time to take a different view (and tap a potentially lucrative upside). “Return” is not necessarily synonymous with “refund.” If you expand your definition to include exchanges and store credit and treat the return experience as a way to support customers, returns can actually be an opportunity to increase customer loyalty and lifetime value.
For example, in a brick-and-mortar store, a customer walks in to return a shirt that’s too big. Would you automatically issue a refund and send her on her way? No! You would help her find a smaller size of the same style, or a style that fits better and do an exchange. Even better, you might also suggest a scarf or jacket that coordinates with the shirt and successfully increase the total sale.
Understand the “why”
The above scenario is just common sense. Unfortunately, it doesn’t occur often online. The exceptions are digital native or DTC brands that have never been able to rely on in-store experiences, and so have built in optimized online returns processes from the start. Your eCommerce store needs to operate in the same way to make the returns process work in your favor. While manually processing online returns is time-consuming and costly, now technology exists that enables customer self-service and automates many of the key return process touchpoints.
But technology won’t fix everything. Most importantly, you need a solid returns strategy based on what you learn from an audit of your return policies and process, customer feedback, and data analytics (and then you probably do need better software!). To get some expert insights on how to turn “returns” into revenue, we talked to the folks at Loop Returns, an eCommerce returns automation platform that supports many leading DTC brands.
Do customers have the information they need?
Returns can cost you. The fewer returns, the better. To reduce the number of returns, you have to understand why your customers are returning. The most common reason consumers return is because of size, fit or color issues. Research shows that wrong sizes or styles are at the root of 72% of returns. If you find this to be the case, it may be because your eCommerce site is missing key information customers need in order to choose the right product, or causing customers to order several different sizes (and return them) to ensure something fits. It’s a good idea to take a close look at product details and sizing information, as well as photography, videos and illustrations to ensure it’s comprehensive, clear and useful.
Another way to find out why customers are returning is to ask them. Some return tools allow you to ask for reasons when a customer starts a return. If you structure your return reason questions the right way, you will find all sorts of ways to improve your business both up and downstream. Allowing the customer to tell you where issues exist is a huge win.
Could your return policy be improved?
A UPS Pulse of the Online Shopper study revealed that a whopping two-thirds of customers read a brand’s return policy before making a purchase. A difficult-to-understand or unforgiving policy can result in higher perceived risk and therefore fewer sales. Don’t let a lawyer write your return policy! According to experts at Loop, a good return policy should clearly answer five key questions: 1) How long do I have to make a return, 2) How do I start the returns process, 3) How long will the returns process take, 4) Will I have to pay to return, and 5) Is there anything I can’t return?
Because approximately a third of purchases are returned, your inclination may be to make returns as inconvenient and cost prohibitive as possible in the hopes that there will be fewer of them. You may have fewer returns, but in the long run, you’ll also have fewer customers and lower sales. The question shouldn’t be, “should we make it harder/easier to return,” but “how does having a customer-centric return experience benefit my brand?”
An online shopping survey conducted by UPS revealed that 69% of consumers say they’re less likely to purchase from a retailer that requires them to pay to make a return; even more (85%) say they won’t purchase again if they have to pay and they’re returning due to product quality, misleading information or shipping delays.
You also may consider being more generous with your return window. According to Loop, most returns are initiated within 14 days of purchase. While the majority of customers likely won’t take advantage of a bigger window, the gesture can go a long way towards improving the customer relationship with your brand. Also, a longer return window reduces perceived risk, lets customers “live” with the product, and can help reduce returns.
Also, reconsider making customers return damaged or wrong products – if it’s a large item (e.g., furniture) that’s difficult to ship, or a relatively inexpensive item (e.g., lip balm), is it worth putting the customer through the hassle? It may be more of a marketing and customer relationship win to tell the customer to keep the product and send a new one (at no additional cost) to replace it, or find ways to donate items you don’t want back.
Does “return” always have to mean “refund?”
A customer portal that allows customers to easily select which returns options work for them – versus sending a prepaid return envelope with every order – is the smartest option with the most potential upside for retaining (or even increasing) revenue. A smart customer portal enables customers to select to exchange, shop with store credit, and even receive incentives to purchase additional items, all as part of a single returns process.
For example, Loop enables multiple ways to return that aren’t refunds: exchanges, “shop now” (lets customers shop for any products during the return process), and store credit. Loop’s platform also streamlines returns of individual products sold in a bundle.
Alex McEachern, Loop’s marketing manager noted: “One of our clients, Baseballism, now refunds less than half of their total returns, and has been able to convert 14% of their returns to upsells, generating an additional $10k per year.” Checkout Loop's The Ecommerce Returns Benchmark Report.
Do returns go into a black hole?
Print a label, mail a return and… hear nothing. Did the brand receive it? How long will it take to get a refund? The not-uncommon lack of or delay in communication around returns is frustrating. Not only does it damage the customer relationship, it can reduce sales – often a customer will wait for a refund before reordering, or give up and decide to purchase elsewhere. Order status tracking apps that integrate with Shopify can eliminate these issues and enable customers to track their returns (and purchases), while reducing customer service tickets.
A new perspective on returns
Returns don’t have to be treated as a cost center – they’re actually an important part of the post-purchase customer support experience that can also generate revenue. By changing your view, you may find previously overlooked opportunities to nurture and strengthen customer relationships to keep them coming back, increasing customer lifetime value. You also may benefit from some more immediate wins like increased revenue through upselling. And insights from customer feedback can be priceless – leverage customer interactions during the returns process to collect a wealth of information that can help your brand build competitive advantage.