How to Drive Customer Loyalty Through Returns Management

Returns cost retailers hundreds of billions of dollars each year. Return rates continue to rise each year as a result of online shopping, customer-centric return policies and, now, COVID-19.

Since the onset of the pandemic, consumers are avoiding stores and shopping online even more than before. In fact, eMarketer predicted online sales to grow by about 18 percent in 2020. goTRG recently conducted a survey which showed that consumer desire to (shop and) make returns online post-pandemic increased by 61 percent. That means retailers will have to reassess strategies to manage the growing volume of returns, with customer experience top-of-mind.

The Returns Opportunity

When effectively managed, returns are also an exciting opportunity to recover lost profits, while driving loyalty by delivering an experience that makes customers want to come back.

In fact, 72 percent of shoppers in a recent poll said a positive returns experience will inspire them to buy again from the same retailer. Optimized returns management offers retailers a chance to rise above competitors. Thanks to the pandemic-fueled economic crisis we find ourselves in, maintaining customer loyalty is more important than ever.

Fully Managed Returns

In a recent survey, 54 percent of retailers reported they want more effective returns processing and management. From my experience, the only path to achieve that goal is through a complete returns solution. Retailers must rethink everything from disposition decisions to return policies to resale strategy — all at once. This is the only way to truly streamline an antiquated, costly process and ensure a positive, consistent customer experience in-store and online.

So, what does an effective returns strategy look like?

1. An Enhanced In-Store Experience

Currently, the stock rooms of most retail stores are filled with employees manually processing returns. This costs time and money, while inadvertently hurting the customer by diverting associates to the back-of-house. However, retailers can dramatically enhance customers’ experiences by using technology to do the job instead.

In a recent survey, consumers cited the ability to speak with an associate as a key reason they prefer in-store over online shopping. In a similar survey, 64 percent of consumers said they prefer to engage with human associates over robot assistants in-store. One thing is clear: technology has its place in-store, but not in a customer-facing capacity.

2. Assurance That Re-Shelved Products Meet the Highest Quality Standards

Retailers can utilize applications to make disposition decisions, where distressed items are immediately earmarked for quick pickup and later processed at a returns center. This process prevents damaged items from accidentally being sent back to shelves or to an online customer. In either scenario, receiving a faulty item will undoubtedly tarnish the brand’s integrity. By employing a quality-control process driven by unbiased, smart technology, retailers can prevent those mistakes and preserve their image.

3. Opportunity to Create Trust at a Time When Customers Need it Most

We're living in a socially distant time fueled by fear of contracting a virus. That means many consumers are avoiding nonessential shopping to reduce their risk. And those who are willing to shop in-store expect retailers to prove it’s safe. This means policies like closing fitting rooms, offering curbside pickup options, and employing touchless technology such as no-hands returns.

It also means retailers must consider adding an extra step to their returns process. Visually inspecting an item before returning it to shelves is not enough anymore. Retailers must also consider a sanitization strategy to clean and disinfect returns before resale. Either through outsourcing refurbishment services or through in-house measures, retailers can guarantee their products are clean and safe to buy.

4. Additional Options for Customers to Access Items in a Secondary Market 

Holistic returns management must incorporate a sound refurbishment strategy to process products that can’t be reintroduced into current inventory. To do this, retailers must work with quality refurbishers who know how to carefully sort goods, repackage with care, and employ expert technicians when repair is needed.

Not only does refurbishment provide another revenue stream for the retailer by increasing the recovery potential on each product, but it also boosts sustainability efforts by diverting obsolete products from landfills and recirculating them into the economy.

This act of social responsibility is not only a feel-good endeavor, it’s a powerful tool to drive loyalty. In fact, research by Certus Insights showed 70 percent of consumers want to know the brands they love also love the planet, and nearly half pay very close attention to a brand’s social responsibility efforts.

5. A Positive Returns Experience; Guaranteed 

Customers want to shop more online today and say they’ll buy again if the experience is positive, yet 40 percent say they’ve held back due to complicated returns policies. These hesitant consumers represent a huge chunk of missing opportunity for e-tailers with complicated shipping rules, delays in refunds, and subpar customer service. Customers don't like complication, and they definitely don’t like to wait.

To address the biggest issue of timely refunds and exchanges, it’s vital for retailers to have a masterful grip on reverse logistics. This allows them to quickly manage returns from receipt to refund to recirculation of goods. For example, packing slips and postage labels should be easily printed or available digitally for customer convenience. Not only does this improve the experience, it also drives greater profits by allowing retailers to recirculate returned items before they become obsolete or out of season.

The Takeaway

When managed through effective policies and data-driven technology, returns can simultaneously build loyalty while driving profits in-store and online. As consumers continue to favor digital channels for purchases, where return rates hover around 30 percent, there will be a massive opportunity for retailers to innovate their reverse logistics operations. From my perspective, this is one of the most underrated tools that retailers have at their disposal and offers a way to thrive during this unprecedented time.

Fara Alexander is the director of brand marketing and communications at goTRG, a global technology company that offers the first fully managed reverse logistics solution.