Enhancing retail return experiences from a revenue burden to a customer loyalty booster: Investing in enhanced return policies
Retail returns, fueled by the surge in e-commerce, are consuming profits at an alarming rate of 20.8% for online purchases, according to researchers. The management of returns has a significant impact on customer retention and their overall value to retailers, prompting companies to reconsider the return experience as a crucial customer interaction point. In essence, effective returns management is an integral aspect of relationship marketing in today's market.
Despite the complexity of managing returns, a growing best practice emphasizes clear communication with customers once a return request has been initiated. Monica Deretich, retail industry advisor to Sailthru, has highlighted this as an essential aspect of returns management.
The return process, which typically takes approximately two weeks to complete, is a critical window for retailers to make a lasting impression on consumers. A negative return experience may discourage shoppers from returning, while a positive one could encourage repeat purchases. According to a study by WBR Insights, 89% of consumers are less likely to shop from a retailer after a bad return experience, while 97% would be more likely to buy again after a positive experience. Similarly, data from Accenture indicates that 82% of consumers consider a retailer's return policy important before making an online purchase.
Accenture analysts have found that a well-managed return experience can result in a 2246% increase in profit per customer on average over six months, and a 29% increase over a three-year period. The National Retail Federation echoes this sentiment, stating, "Although accounting-wise a return is a lost sale, from a service perspective, a return is a 'moment of truth' that can be planned for and maximized."
To improve the return experience, retailers should aim to manage customer expectations and perceptions from the time a return request is made. This can be achieved by tailoring communication to individual consumer behaviors and preferences, and by incentivizing actions retailers want customers to take in the future.
By viewing transactional return notifications as opportunities for nurturing relationships, retailers can communicate their appreciation to first-time purchasers while encouraging them to make another purchase. Furthermore, retailers should acknowledge repeat customers, whose returns are often a sign of their loyalty, by using data for a personalized touch.
The reasons for initiating a return are diverse, ranging from poor fit to buyer's remorse. Retailers should utilize this data to trigger automated lifecycle flows and tailor their response, such as educating customers about sizing or offering alternatives based on their preferences.
Post-return communications should ideally be coordinated with post-purchase communications to avoid confusion. Retailers should also ensure they do not inadvertently send reviews requests for products that have been returned. By integrating marketing platforms, retailers can improve the return experience for their customers.
Effective personalization of the return experience can transform returns from an expense to a valuable opportunity for deeper customer engagement and long-term loyalty. Leading retailers are adopting best practices such as data-driven recommendations, virtual try-on, personalized support, segmentation, and privacy-conscious personalization to improve returns management. By following these practices, e-commerce retailers can reduce unnecessary returns, enhance customer satisfaction, and foster loyalty.
- Amidst the growing complexity in retail returns, effective communication with customers after a return request is initiated is considered a crucial best practice.
- A positive return experience can encourage repeat purchases and foster customer loyalty, as a study by WBR Insights reveals that 89% of consumers are less likely to shop from a retailer after a bad return experience, while 97% would be more likely to do so after a positive one.
- Accenture analysts found that a well-managed return experience can significantly increase profits, with an average 2246% increase in profit per customer over six months and a 29% increase over a three-year period.
- To improve the return experience, retailers should personalize their communication, matching it with individual consumer behaviors and preferences, and leverage data to trigger automated lifecycle flows and tailor their responses to minimize unnecessary returns and enhance customer satisfaction.
