Returns, the ‘dirty’ word in retail, are a recurring nightmare for staff and customers alike. It’s something we can all relate to; as a consumer we dread the long lines, endless waiting, and seemingly annoyed sales staff. Whilst as a retailer, processing a mountain of returns can seem like a complicated, costly and unwelcome hassle.
The state of the market consumer returns are an expensive exercise – accounting for £60bn a year in costs for British businesses today. With such a hefty price tag, it would be easy to attribute some of the plight of UK retailers to the sheer cost of returns. Indeed, online giant Amazon has taken steps to tackle this issue and revised its policy on returns to ban serial ‘returners’ from its site – all in an aim to protect the Amazon experience and to prevent abuse of its system.
On the flip side, others are making it easier than ever for customers to return items. PayPal has a ‘return shipping on us’ policy covering your shipping costs to return items to select stores.
Additionally fashion retailer ASOS launched the ‘try before you buy’ service allowing shoppers to only pay for the items they keep as opposed to paying upfront for the items they ordered. The initiative has been such a success with younger shoppers that the retailer saw sales increased to £300m in the latter months of 2017.
The hidden return on returns
Customers today use many different channels to shop and Medallia’s research has shown
that regardless of the channel they used, customers who had a very positive returns experience made more transactions over the following six months, and spent 16% more during that time, than customers who did not have a positive returns experience.
Customers with the most satisfying returns experience also ended up returning fewer items: in the same six months, they made nearly 10% fewer returns than customers who had a poor returns experience.
ASOS’ results suggest, contrary to expectation, customers who have a great returns experience ultimately spend more money, and indeed return fewer items in the future. Retailers looking to emulate this success can do the following:
- Think omnichannel – make sure you are giving your customer as many channels as possible to choose from when completing their purchase – it may result in a greater volume of returns in the first place, but it ultimately builds loyalty and trust with the customer.
- Make it painless (and free) – customers are more likely to have the confidence to make a big purchase if they know the returns process will be straightforward. Afterall, the easier it is, the more likely they are to order (and keep) more.
- Use it as an opportunity – as most returns take place in store, use the returns process as an opportunity to show off your brand, service and products in person to your customer. Stand-out and you may make another sale there and then.
Reaping the rewards
There’s no doubt about it, for many shoppers and vendors alike, the returns process can seem like a cargo ship of hell in a sea of retail pleasantry. And though they are a costly business, they are an essential part of the retail journey.
Ultimately, bands that focus on satisfying customers (people), not just processing returns (products), are making a strategic investment in customer relationships, which are likely to increase customer loyalty and, ultimately, spend.
Kareena Uttamchandani is a senior manager and solutions consultant at Medallia, which aims to help businesses ‘win’ by improving customer experiences.