Insight / Blog

Why you need a returns platform: Customer Retention

Posted on 3rd February 2020

Are the following list items important 2020 targets for your retail business?

  • Improve CX

  • Capture data

  • Faster returns

  • Process returns more efficiently

  • Recover lost revenue

  • Ensure customer loyalty

  • Reduce support queries

If you answered yes to most of those, you’re going to need a returns platform to digitally manage your returns and connect them to the rest of your business.

Don’t let your customer experience suck

We love to talk about customer experience. Every retailer lists it as a top priority, understandably. Yet when it comes to returns, that experience usually sucks. (Sorry! It’s just true.)

A survey from NPR found that 56% of shoppers have kept something they wanted to return, and a majority of those did so because the whole process was just too much hassle. When your customers want to return something but choose to take a monetary loss instead, that doesn’t sound like a working experience to me.

Just look at the poor lady in the stock photo I picked for this article. She’s so mad about her return going wrong that she’s actually dissolving into smoke. Talk about losing a customer!

It’s also a pretty bad moment for a customer’s relationship with your brand. Having a bad returns experience makes a customer three times more likely to walk away and never shop with you again. Knowing that the returns experience sucks too much to even deal with doesn’t exactly spell ‘enthusiastic future purchaser’.

I know what you’re thinking: “Come on! It’s not like retailers are loving the way returns work right now either”.

That’s true and understandable, given that the cost to retailers is estimated to hit $550 billion this year. eCommerce return rates are somewhere around 20%, but some categories such as apparel are hit way harder. The result is that retailers see returns as a super-painful cost, and they’re obviously not technically wrong there. That can make it hard to justify investing on a returns platform. The problem is that this view is that it’s a bit like treating acquisition spend as a cost.

Keeping customers is cheaper than acquiring new ones

Major retailers spend millions on digital advertising in order to attract and convert browsers. You’ve probably seen or heard that it costs 5 times as much to acquire a customer than retain an existing one.

As an aside, this is one of those stats which gets bandied about from blog to blog without a proper source, each article referring to another in an endless circle of B2B marketing content eating its own tail. Anyway, one Google dive later, I can tell you that the original stat is 5x and is from a 2010 report by Lee Resources. I assume that Lee Resources is a company and not a guy with an unusual surname. Regardless, a happy 10th birthday to this much-quoted stat.

The exact figure aside, if you have a customer’s data and they’ve already been through the journey of acquisition and trust to purchase from you once, it should be easier and cheaper to get them to buy something again. Obviously, if you’ve just made it so hard to return something that they won’t even bother, this might not work so easily.

That’s why getting the return experience right is much more like a customer retention cost. Investing in a returns platform that makes returns painless for your customers transforms them from a cost center into a powerful driver of customer loyalty, and something to differentiate you from the field.

I’m not suggesting that retailers divert all their advertising spending towards returns, as interesting a thought experiment as that is. What they should look at, however, is some investment in getting the experience journey right, after a customer has purchased something. That’s exactly what a returns platform is for.

Find out more about digital returns platforms.



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Saving profits and the planet: 4 ways to sustainable & cost-effective returns 

Returns drain profits and damage sustainability. Luckily, retailers can implement both cost-effective and sustainable returns using these 4 ways.

Speedy refunds: creating happy customers through fast & effective returns

Find out how speedy refunds can recapture revenue, increase customer loyalty and boost lifetime value.

Why mastering returns is key to 3PL growth

With returns management systems, 3PLs can turn returns from a burden to a competitive advantage.

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