The economic climate is turbulent. Interest rates are rising, revenue growth is slowing, and a recession is at-hand. Whether you’re a brick-and-mortar seller or an online merchant, unsavory economic conditions are bad news for business.
In times like these, holding onto the customers you have (and the revenue that comes with them) is essential. As is curtailing costly waste—WISMR calls, refunds that could have been exchanges, shipping on ineligible returns, etc—that cannibalizes revenue needlessly.
Would you rather see your revenue roasted over a fire or nipped on the nose?—Because nothing destroys earned revenue like refunds. While many retailers think refunds are the unavoidable ‘cost of doing business,’ nothing could be further from the truth.
An effortless returns experience can turn a customer looking for a cash refund into a customer looking for an exchange. Facilitating that transformation does more than retain short-term revenue—it builds lifetime value fueling long term growth.
Offering store credit in lieu of a refund also goes hand-in-hand with revenue retention. Not only does store credit keep customers coming back, but it can be used to cater to consumers’ general impatience for returns processing—store credit is easy to issue instantly, while cash refunds are not.
of customers that exchanged a return bought from the same retailer because it was “easy to”.
When push comes to shove, few things are as effective at stopping needless revenue loss as return eligibility rules. Used the right way, you can restrict returns for certain product types (e.g., skincare), customer groups (e.g., first-time buyers), specialized/season items (e.g., swimwear), and much, much more.
Moreover, identifying product eligibility can be automated, which stops needless calls to your customer service reps before they start.
Speaking of needless calls to customer service, “Where is my refund?” inquiries are as revenue-wasting as it gets.
Not only do you lose money on the refund itself, but you’re forcing your customer service team to waste time and energy that could be better used servicing revenue-generating customers.
To minimize WISMR inquiries, engage in proactive communication—notify customers by text or email when their return is received by the carrier, when it reaches the warehouse, and the moment when their refund is issued.
Fair or unfair, not all customers are created equal. There are some—your VIPs—that are just more important to your bottom line than others.
In times of economic distress, it’s important to do more to keep these customers happy and spending.
Consider loyalty programs that offer your most valuable customers exciting perks. For example, Madewell Star ($500+ minimum spend) and Madewell Icon ($1,000+) programs receive:
Collectable tote bags
Free expedited shipping + returns
Dedicated concierge phone service
And much, much more!
of VIP shoppers feel ‘free returns’ are a ‘must-have’ for their loyalty.
Keeping shelves stocked—and stocked with the right items—continues to be a difficult task for many retailers in the midst of supply chain disruptions.
Leveraging recently returned merchandise—especially when it’s unused—can be a valuable resource for inventory-starved retailers.
With that in mind, tap customers as a source of inventory. Incentivize them to process their returns faster so you can avoid the carrying cost of products sitting unopened in a closet or garage.
If need be, enable instant refunds or pre-authorized returns for known shoppers to help you expedite routing returns to the most “in-need” storefronts or distribution centers.