“You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.”
Dale Carnegie sold 30 million copies of “How to Win Friends and Influence People” with his simple but vital insights. These words were written a century ago, but the sentiment is just as relevant in the omnichannel marketplace of today. There is a little known fact in marketing: it costs 5 times more to acquire the interest of a new customer than to focus on satisfying a current one. Yet focusing on customer retention pays big dividends: increasing customer loyalty by 5% can lead to a whopping 75% more company revenue, according to a recent study by Bain.
Transforming this liability into an opportunity is not only necessary for the future, but delivers results today.
One major perceived obstacle in the retail industry is merchandise returns. While a necessary part of the post-purchase experience and a critical driver of customer loyalty, returns still appear to be a dark cloud–a storm of alarming financials and supply chain inefficiency. The National Retail Federation reports that returns totaled $260.5 billion in 2015, having increased over 50% in the previous 5 years. To put the numbers in perspective, the NRF noted that if returns were a corporation, they’d rank #3 on the Fortune 500. Ultimately, a company’s unease with returns often translates into a compromised experience that leaves customers cold and frustrated.
Despite these figures, transforming this liability into an opportunity is not only necessary for the future, but delivers results today. Here are some ways to make the most of your returns policy to increase loyalty and sales:
Invest in great return policies for greater revenues.
We live in an Amazon-dominated world of no-cost, no-hassle, and no-questions-asked return policies. Not only is it increasingly necessary to offer the same or better, it can lead to more revenue. UPS’s “Pulse of the Online Shopper” study this year showed that nearly three-quarters of customers ranked simply knowing they could return an item for free as an “important option at checkout”. A study from the University of Texas-Dallas found that extended-time return policies led to fewer returns in the end.
UT researcher Ryan Freling explained to The Washington Post, “Since [customers] don’t feel pressure to take it right back to the store, they kind of sit with it and live with it and say, ‘Well it’s not that bad.’” While different policies for different verticals, products and types of returns are necessary to maximize a company’s bottom line, generous policies are no longer optional for retailers that want to excel.
Maximize purchasing potential during the returns process.
Most customers say they prefer to return items in-store, but most actually do their returns online. In either case, new sales can be created. In-store pickups are already subject to all of a company’s in-store marketing savvy: the 2016 “IBM Consumer Expectations Study” reports the percentage of customers buying something new while making an in-store return went from 48% in 2011 to a whopping 69% last year. For online returns, personalizing upsell recommendations, keeping a customer informed about return progress, eliminating re-stocking fees, and maintaining a seamless branded interface help keep the mood up and ultimately recapture the refund.
Per an IBM study, 69% of customers buy something new while making an in-store return.
Treat product returns like a purchase.
Today, we know more about streamlining the post-purchase customer experience than ever before. Modern customers expect delivery status across multiple channels and appreciate beautiful, branded interfaces. They expect power over delivery options and locations. Double customer satisfaction by duplicating these features when it comes to returns and exchanges. Process and credit both in-store and online returns as quickly and efficiently as an outbound shipment to accelerate the recapture of the refund, and exceed expectations by checking in and resolving concerns with complimentary gifts.
Stay ahead of competition by innovating in returns.
Cutting edge brands like Warby Parker build intelligent returns into their core business model. With “Home Try On,” they ship 5 pairs of eyeglass frames for free — and once you choose your favorite, your final product is also shipped free. Just like that, the returns process has become a 21st century “fitting room.” Zappos makes a point to exceed delivery speed expectations, and often serves up one-day delivery when two days was promised. Exchanges are a breeze, executed in good faith: they send replacements before receiving returns, not after. Such companies are becoming the Nordstroms of today, solidifying relationships with customers for life.
Have you found a creative way to meet the returns needs of your clients while decreasing your own risk? Let us know on Twitter @narvarinc.