From revenue drain to loyalty driver: upgrading retail return experiences - The Entrepreneurial Way with A.I.


Monday, August 8, 2022

From revenue drain to loyalty driver: upgrading retail return experiences


An offshoot of growing e-commerce adoption, retail returns have swelled in the last couple of years, eating into profits at a 20.8% rate for items purchased online, say researchers. Just as important, returns management has a lasting impact on customer retention and lifetime value — a realization that’s driving retailers to rethink the return experience as a critical customer touchpoint. Put simply, returns management is integral to relationship marketing in today’s market.

Though effective returns management has many moving parts, a rising best practice focuses on how retailers communicate with customers after they’ve received a return request, says Monica Deretich, retail industry advisor to Sailthru. 

Profit drain or driver?

For consumers, deciding to return a purchase is a bummer, tinged with disappointment and regret. Often, there’s also a hint of anxiety: “Will I get my money back? Will my exchange go smoothly? Will the retailer keep their promises? How long do I have to wait?” In all, a typical return process takes roughly two weeks to complete — a critical window when retailers leave an impression that will either compel or dissuade those shoppers from buying again. 

A study by WBR Insights found 89% of consumers are less likely to buy from a retailer following a bad return experience, while 97% would likely buy again after a positive return experience. Data from Accenture supports this notion: 82% of consumers consider a retailer’s return policy important before making an online purchase. 

“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,” writes the National Retail Federation. To that point, Accenture analysts found that a well-managed return experience can drive a 2246% increase in profit per customer on average over six months, and a 29% increase over a three-year span.

Designing a better experience

Logistics aside, the least retailers can do when processing a return is manage customer expectations and perceptions from the moment a return request is made. Retailers can accomplish this by communicating in a way that is relevant to individual consumer behaviors and preferences, and that incentivizes the actions they want customers to take in the future.

Nurturing individual relationships

To make that possible, Deretich advises retailers to view transactional return notifications as opportunities for nurture. “You can segment and tailor your messaging to a first-time purchaser, for example, conveying that you value their satisfaction and encouraging them to make a new purchase,” she explains. 

Deretich also notes a commonly missed opportunity: failing to acknowledge that your best customers are likely your biggest returners. “Customers with a higher lifetime value make repeat purchases faster and more often,” she says. “Their return experience is a crucial time to acknowledge their loyalty using data for a personalized touch.”

Using disposition data to drive post-return spend

Poor fit, quality issues, damaged items, delayed fulfillment and buyer’s remorse are just a handful of the many reasons why a consumer initiates a return. “Not every retailer asks for those reasons. That’s amazing data that should be used in the post-return experience,” says Deretich.

To that end, those data points can serve as triggers for automated lifecycle flows: “If there’s a fit issue, following up with a nurture email educating the customer on your size guide could be part of your win-back strategy,” she explains.

Orchestrating post-return communications

Once a return is accepted or a refund is processed, retailers should use that event to trigger a nurture campaign or lifecycle optimization flow. At the same time, it’s important to ensure post-return communications don’t conflict with post-purchase communications.

“As a customer, I’ve received an automated email requesting a review for a product I’ve returned. Retailers should be suppressing those messages based on return request events,” Deretich cautions. “These types of mistakes can be avoided when data is connected across platforms.”

Integrating platforms to improve experiences

To improve the return experience, retailers can start by examining which customer action events are part of their return, refund and exchange processes today. “Those action steps vary, depending on the retailer’s revenue model. In any case, review what action events you can use as automation triggers in orchestrating your email and SMS nurture beyond transactional communications,” Deretich advises. “If your marketing platforms aren’t integrated, this warrants internal discussions to better connect the customer experience beyond transactional emails toward improved retention,” she concludes.

Returns management is an expensive business. Managed well, it’s also key to retaining customers, curbing losses and fueling revenue for the long haul.

How are leading retailers meeting consumer demands for personalization? Glean from detailed insights and see how 100 retailers stack up when you access the 2022 Retail Personalization Index Retail & Consumer Survey.


, Khareem Sudlow