How to make returns easier for your customers, while retaining loyalty and maximising profits

The Christmas trading period is upon us and this year retailers are facing challenges such as staff shortages, softening consumer demand due to higher interest rates, the rising cost of living and disrupted supply chains.

It is more important than ever for retailers to try and ensure that when they sell a product this holiday season, it isn’t coming back. However, with global e-commerce sales projected to hit US$4.9 trillion ($7.2 trillion) by 2023, the volume of returns is also set to increase. 

Making returns easier for customers might seem counterintuitive to increasing margins and maximising profits, but the reality is that if you’re easier to shop with, customers will buy more from you.

A survey by Loop in 2021 found that when customers were able to return a product for a refund, those companies saw a 17.8% increase in repeat purchases compared to those customers who didn’t engage in any type of return event. Exchanges were found to provide an even larger lift, increasing the repeat purchase rate by almost 34%.

So how can retailers make returns easier for customers and maximise profits?

How to make returns easier for customers

1. Highlight your returns policy

   It is vital your returns policies are clearly stated and posted visibly online, including in shipped packages and in-store. Offer a variety of options for customers to return items on their own with minimal effort. It also helps to lay out clearly defined policies that address several types of return situations. A great example of this is the returns policy outlined online at retailer Taking Shape, which offers multiple ways for consumers to return items for maximum convenience.

   In addition to having a sign at checkout detailing how you handle returns; you may also want to print your policy on your receipts. In some cases, employees should also be instructed to verbally communicate your return policies. For instance, if you don’t accept returns for sale items, have your staff remind shoppers of this when they see that a customer has purchased an item from the clearance rack. This will help prevent any potential frustration further down the line.

2. Provide a great customer experience across all platforms

   The line between brick-and-mortar stores and your online storefront should be unnoticeable to customers. Ensuring consistency across the customer journey, whether customers are visiting your store, website or mobile app is critical. It will build a frictionless experience and easy interaction for your customers. For retailers that don’t have physical locations available in every area of the country, it is important to provide easy-to-find return labels and policies around postage. You can include a paid return envelope in the package, an easy-to-use link for ‘request returns package here’ and use third-party locations like newsagents or lockers. This way, customers who do not wish to visit a physical store are provided with a pain-free way to return their products.

   In a recent survey of global retailers we commissioned with Incisiv, more than half said they would increase the number of return locations. If you’re able to offer your customers this, it should be emphasised. Not many retailers offer this and for many customers, this is a real benefit as it’s more convenient to drop it off at a store than package and send in some cases. It is also cheaper for the customer if you don’t cover the cost of the postage and better for the environment. If you have popular products that frequently sell out, offering ship-to-store options can keep customers coming back. The knowledge that any product is available, no matter its current location, will drive in-store visits and maintain customer satisfaction.

3. Grab the opportunity for conversion and upselling

   Ask your staff to entice customers by reminding them of the great products or gift cards they can get in exchange for the item that they’re returning. Hopefully, this will get them to explore your shop to see what they can get using their store credit or potentially upsell the original investment. For example, if a customer has bought a shirt online that doesn’t fit properly and has come into the store to return it, use the opportunity to offer a different size or brand that might suit their requirements better. 

   Kiran Flynn from the Taking Shape digital team explains: “Returns are an opportunity to provide exceptional service by solving the problem for the customer. Whether it be to simply provide a no-fuss return experience that gives customers the confidence to shop with the brand again, or an opportunity to start the service experience all over again with the customer, to solve the original wardrobe dilemma. Exceptional returns experiences create greater brand loyalty and trust, and further enhances your connection with your customer. It is important to empower your team to make the returns process a positive one for both the customer and the brand.”

4. Use returns to gather insights

   Returns can give you insights into your products, your customers, and even your marketing strategy. So, make a point to gather feedback every time you process a return or exchange. Always ask why a customer is returning the product. Were they not satisfied? Did they find a better alternative somewhere else? Was the item damaged? Or did it not fit? 

   Technology is your friend when it comes to data analysis. Good retail software should tell you which products get returned, how quickly, and via which routes. This way you can assess the cost of returns in terms of time and profit and correct any negative trends early. It may be an issue with a product. Or, with your marketing.

You may consider having different returns policies or processes in place for high-value customers or those that tend to buy items at full price. This is an important consideration, as taking care of customers in these categories in the long term makes more business sense, so maintaining their loyalty is key.