Returns: The Good, the Bad and the Ugly
Historically, most retailers view returns as a plague on their business. Not only do you lose the sale, but you pay for the privilege of your customer returning the unwanted merchandise to you. The National Retail Federation’s 2015 annual survey of North America retailers found that $260 billion worth of merchandise was returned last year. Who wants that?
Actually, you do! A return represents a valuable opportunity to not just save the sale, but to impress your customer and deepen your relationship with them. Case in point: Zappos.com, whose entire business is based on a better, easier return process. The same is true for subscription businesses like Stitch Fix and Trunk Club, and even traditional brick-and-mortar retailers like Nordstrom, whose no hassle, no limit return policies give total confidence to customers that this is the right — and safe — retailer from which to buy.
Open return policies, however, aren't the only opportunity. To make a return, customers have to identify themselves. Why not return the favor and show that you know them and value them? For example, they may need to come to your site to print a shipping label. Why not personalize the page to suggest alternatives to what they're returning? If you have to include a small inducement to make that more compelling, so be it. Even a nominal offer will do the trick. Retailers might be surprised the lengths to which consumers will go for something that’s free.
Another idea is to follow up a return from a new customer with a letter — yes, a snail mail letter — saying, “Sorry our product didn’t work out this time. Here’s a little something to convince you to let us try again.”
As a consumer, wouldn’t you be pleasantly surprised by that? Wouldn’t that be enough to let you try that retailer again? Guideboat Co. did just that for me this past holiday, and I can safely say that this the only offer from the past year (or month or week or day) from any retailer that I still remember. That is successful marketing!
Multichannel retailers, in particular, need to seize this opportunity. The fact they have stores is a huge advantage for returns. It saves the cost of shipping, creates an opportunity for an exchange rather than a return, and creates an upsell opportunity for additional merchandise. You can also encourage store returns with preferential pricing for returning to stores, or free alterations on new items. The advantage of physical stores in the return process is one reason why more and more online pure-plays are opening physical stores (e.g., Bonobos, Warby Parker and even Amazon.com).
Another opportunity with returns is capturing feedback on why customers are returning products. Bad fit? Bad quality? Off trend? This is invaluable information for the retailer, as any insight can help it improve its business. However, many shoppers, if they provide a reason at all, simply check the first box in a list of reasons. Retailers might consider offering a small incentive for providing a return reason, or even making it a condition of printing a free return label. Again, store-based retailers have a distinct advantage as they can ask the customer directly and then see if they can solve the problem in real time. “Yes, that shirt does cut a little tight in the arm. How about this one?”
By capitalizing on any engagement with the customer, initially unsatisfied customers can be enticed to return for a second, more fulfilling retail experience.
Graeme Grant is vice president, store solutions, at Salesforce Commerce Cloud, a cloud-based e-commerce platform provider.
