Loyalty Strategy

Returns Get Real: Be Prepared To Pay, Some Companies Now Say

Photo by Sorbis on Shutterstock.com

By: Lanndon Lindsay

Most marketers are aware that the overall experience they provide their customers extends far past their initial purchase. After all, every business wants to drive repeat purchase and continued engagement, and strategic omni-channel deployment is becoming ever more sophisticated.

But there’s a niche area of CX interfacing that sometimes doesn’t get the attention it deserves: what happens when your customer is dissatisfied with their purchase and wants to make a return?

The importance of this stopover along the path-to-purchase is often neglected. As the returns stage is typically one of the final interactions with a brand or retailer, it has a tendency to linger in the minds of customers and dramatically affect their beliefs and values. And these beliefs aren’t always flattering. In fact, research uncovered by insights company Doddle revealed that three-quarters of respondents think retailers’ returns experiences need to be better.  In addition, analysis of 1,400 U.S. consumers found that shoppers value the returns experiences even more than delivery and payment experiences.

All of this is pretext to discuss an intriguing new trend in commerce; some retailers have begun charging customers a fee to return merchandise.

There’s a logic behind this move that may have been kindled by the pandemic. Deep into the throes of online-only shopping, customers began to “bracket” their purchases (buying multiple sizes or colors of the same item and sending back what they don’t want). According to data from the National Retail Federation, shoppers returned $100 billion worth of merchandise purchased online in 2020. The following year, that number $218 billion. The average retailer sees $166 million in returns for every $1 billion in sales, according to the NRF.

Erin Halka, senior director of solution strategy — commerce at supply-chain management firm Blue Yonder, explains the difficulties this creates for retailers:

“You have to think about not just the cost of shipping, but it’s the cost of labor, it’s the cost of maybe cleaning that item, repairing it potentially too, repackaging it to make it look better so that the next customer that’s receiving it does not realize it’s already been in the hands of another customer. While we kind of think of just the shipping angle as recouping the cost, there’s so much additional labor and materials that go into the workflow.”

Freemium Returns?

If pay-to-return really does become the norm, perhaps it offers an avenue into the world of loyalty. As we all know, special perks reserved for loyal customers sitting in premium membership tiers helps entrench feelings of exclusivity as well as motivating engagement.

Could free returns at retail act like a loyalty reward?

That’s exactly what designer shoe and fashion accessory brand DSW is experimenting with; membership into their VIP rewards program (earned with an annual spend of at least $200) waives the standard $8.50 fee for each return.

Returns Management 101

Just like any strategic discipline or department within your business, the process of returns requires careful planning and fine tuning to the nuances of your brand. But there are a few general considerations you can begin to adopt straight away and improve what may very well be a weak link in your chain of positive customer experiences:

Analyze Your “Fingerprint”

Every business exhibits a unique pattern in the workflow underpinning the returns process. From front-line staffing and support to warehousing/logistics, accounts, platform capabilities; the entire chain of events and accompanying data flows need to be expertly understood before making any decisions about return fees. Make sure that you keep a keen eye on instances of cancellations, exchanges, refund claims, and “edge cases,” so that every eventuality can be prepared for and corresponding tactics can be rationalized.

Get “Soft”

Marketing these days seems to be all about hard facts and figures. The truth is, it can still be tough to represent the vagaries of opinion and the nebulosity of equity through raw numbers. So don’t be afraid to look at the “softer” sources of information: comments on social media, reviews left on websites, and sternly emailed sentiments can all help take the temperature of how customers are feeling about their returns experience.

Dig Into Digital

To help offset rising costs and put convenience back into the shopping bags of customers, many retailers are seeking out ways to digitize and automate their returns processes. Some companies, for example, enlist the help of QR codes, which can be scanned independently to prepare it for drop off at any United States Post Office location. And with automated AI powered chatbots plugged into the very beginning of the returns workflow, some problems around a customer’s purchase can be resolved, removing the need for a return at all.

Returns Get Real: Be Prepared To Pay, Some Companies Now Say
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