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Strategy

Make the Most Out of Product Returns and Exchanges

All businesses face returns and exchange expenses—but it doesn’t have to be a total loss. Here’s how you can make the most out of them.

Matt Duczeminski
July 15 2019

10% of all merchandise sold in the US is returned or exchanged, totaling 369 billion in sales losses. Statista predicts that return processes for eCommerce companies could add up to $550 billion in labor costs throughout the industry. In a perfect marketing world, we’d advise companies to “make sure customers don’t make returns.” Unfortunately, this isn’t how things play out in real life. Returns are an ingrained part of the buyer’s process. 67% of consumers check out a brand’s return policy before doing business with them. In other words, two-thirds of consumers consider the return process before even making a purchase.

As a business owner, there are a couple of ways to view returns:

You can view them as an unfortunate evil, or you can use your return processes as an opportunity to improve the customer experience.

More from PostFunnel on customer experience:
The Best Examples of Retailers Reinventing Their Loyalty Programs
How Stitch Fix Uses Data to Increase Sales and Engage Customers
These Modern Brands Prioritizing Customer Service Above All Else

The Hidden Benefits of Engaging with Returners

Returns will happen, but a streamlined returns process promotes loyalty. A 2017 report by Narvar found that 95% of consumers would repeatedly shop with a brand that provides a positive returns experience. By developing a customer-friendly—and maybe even enjoyable—returns experience, you’ll build trust among your customer base that will set you apart from competitors.

Ironically, return engagements can provide an opportunity to sell more to your customers. Just because a customer returns one item doesn’t mean you don’t have something else to offer them.

Finally, returns engagements give your team additional opportunities to learn more about your customers. Whether extrapolating information based on their returns (and subsequent purchases) or directly soliciting feedback from them throughout the process, these insights can add value to your customer-facing initiatives.

Since you can’t completely avoid returns, your next best bet is to squeeze as much value from them as you possibly can.

Identifying Returner “Types”

There are two main categories of returners:

Consumers who generally make returns for understandable reasons (improper fit, faulty manufacturing, buyer’s remorse, etc.). But we also have “serial returners,” customers who make multiple purchases with the clear intention of returning some, most, or the entire haul.

Let’s break these down a bit further.

Sporadic Returners

Legitimate returners are easy to identify on both an individual and audience-wide basis. Customers typically have a specific reason for making a return. Moreover, these customers may be more open to making a separate purchase that would provide more or better value to them. On a macro level, the customers who make “legitimate” returns will do so sporadically, as needed. These customers tend to put more thought and commitment into their purchases.

Serial Returners

Serial returners purchase a large amount of items, take a closer look at each item when it arrives, then keep or return as desired. Spotting these returners is easy. On an individual level, serial returners will often return multiple items—typically, products that are similar to each other. They might not volunteer much information in terms of why they’re returning, nor seem particularly receptive to further sales pitches.

On a broader scale, serial returners have higher than average purchase and returns numbers compared to the rest of your customer base. In contrast to sporadic returners, serial returners don’t take their initial purchasing decision very seriously and will spend money up front knowing they’ll eventually get it back.

It’s important to identify the types of returners so you know how to approach and cater to them.

Giving the Returner What They Really Want

Your goal is to give customers what they want as best you can. The key, though, is to tune into their less obvious desires. This involves not just listening to comments and feedback, but paying attention to how they’re using your product and what they hope to gain from it.

In some cases, this is a straightforward process, but when it comes to serial returners, it’ll require more digging.

Catering to Legitimate, Sporadic Returners

Engaging with legitimate returners isn’t complicated. Often, you have just one additional step: guide them through the usual returns process while also considering any information you received during the return. For example, a sales rep or automated email might present a variety of similar products to a returner based on the comments they made about the original product and their overall purchasing history.

When dealing with sporadic returners, it comes down to suggesting a replacement product or alternative service that will better suit their needs. Be it an upsell, cross-sell, or even a downsell offering, your goal is to ensure that both your customer and your business get some value out of the interaction.

Catering to Serial Returners

When it comes to serial returners, you’ll need to take a step back and look at the bigger picture. As mentioned earlier, serial returners are less receptive to product recommendations than their sporadic counterparts—unless you offer super personalized recommendations. To really provide value and maximize the value they bring, you need to enhance your overall customer experience.

A prime example is Amazon’s 2017 rollout of Prime Wardrobe, which allows members to order a certain amount of items in a single shipment, return what they don’t want, and pay for what they keep. This service was a clear response to innovative try-before-you-buy services, such as Stitch Fix.

Source

Amazon has provided another way for serial returners to shop as they please without hurting the brand. This past April, the eCommerce giant partnered with Kohl’s department stores to accept Amazon returns. The consumer can make an easy return, Kohl’s gets extra foot traffic, and Amazon decreases the cost of processing returns: it’s a win-win-win situation. Rather than shunning your serial returners (which, ironically, Amazon is also doing), embrace them and evolve your experience to better suit their true needs.

While serial returners may cost your company money and other resources upfront, you’ll gain more for continually catering to their needs.

Wrapping Up and Moving On

It’s a simple fact of the business world: at some point in time and for a broad range of reasons, your customers will return an item to you. Whether they do so once in a while or all the time – it’s going to happen. The silver lining is that each return instance provides another opportunity to engage with your customers, and to reinforce how your brand can help them succeed.

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Matt Duczeminski

Matt is a professional writer specializing in helping entrepreneurs improve relationships with their customers. He lives in Philadelphia with his wife, Sarah, and he'd probably get a lot more work done if his cat would stop bothering him.

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