Minimizing Online Returns the Intelligent Way

With 87 percent of shoppers beginning their customer journey in digital channels, brick-and-mortar retailers need to invest in optimizing their e-commerce strategy. For most brands, online shopping presents new challenges, including ever-growing return rates. With customers unable to try on an item when they purchase online, shoppers order multiple of the same item with the idea of returning the sizes that don’t fit. While a flexible return policy is beneficial for customers, retailers can face decreased margins and lower return on investment. While the focus is always on ensuring the customer is happy, retailers must account for inventory control, cost of shipping and unwanted items.

That’s where customer intelligence (CI) comes in. Through the power of CI, retailers can leverage their first-party data to ensure they're properly providing customers with accurate and relevant product recommendations to minimize returns. CI helps retailers better understand their customers’ buying habits and preferences, and personalize their offerings based on shopper behaviors. Providing a better customer experience means happier and more loyal customers, which in turn leads to increased revenue and profit for retailers.

Why Customer Intelligence, Why Today?

With a multitude of digital channels, it’s more important than ever for retailers to truly understand who the customer is beyond their purchases. As evidenced by the success of D-to-C companies, consumers want to feel engaged and valued by their favorite brands. Retailers must optimize their engagement strategy across more customer touchpoints and devices than before.

The omnichannel path to purchase, from mobile to desktop to in-store, can result in a fragmented view of the customer if marketers aren't properly organized. CI provides marketers with the ability to recognize each customer as the same individual, no matter the device or channel they use to interact with the brand. This level of understanding enables marketers to personalize their engagement efforts based on each customer’s preferences and shopping behavior, cultivating brand affinity and loyalty.

Solving the Returns Conundrum

While many retailers have seen an uptick in sales as a result of online shopping, large amounts of these sales are undercut by returns. In the U.S., consumers returned $351 billion of all online and offline purchases in 2017.

When we look at why consumers return items, a lot of it stems from the fact that shoppers want options. Without physically interacting with a product, shoppers are unable to determine the look, feel or size, thus leading to the return conundrum. Customer data is the key to solving this problem. By leveraging data to better understand their customers — e.g., who they are, what they want, their past purchases and interests — retailers are able to deliver personalized product recommendations to minimize return issues.

CI empowers retailers with a deeper understanding of their customers, based on each individual’s unique buying habits, return behavior, loyalty program information, and more. Retail marketers can then use these insights to personalize the customer experience. For example, if a customer recently purchased a shirt in a size small but returned it due to fit, and her customer profile shows that she purchased a size medium shirt in the past, it would be beneficial for the retailer to deliver a remarketing message offering the shirt in a medium instead. With a personalized message such as this, delivered at the right time, the brand demonstrates an understanding of the customer’s unique experience and her history with the brand and encourages her continued engagement and loyalty.

Push for BOPIS

Buy online, pick up in-store (BOPIS) offerings are gaining traction because of the potential to upsell a shopper once they’re in a physical location. Going beyond the traditional incentives of discounted items, CI can create a seamless personalized experience across offline and online channels. Based on purchase history, CI helps retailers recommend relevant products once the shopper is picking up their online order.

A focus on driving in-store traffic through BOPIS can also reduce the volume of online returns. The ability to touch the product and try it on as needed, without the hassle of looking for the item, provides an improved shopper experience.

At the end of the day, online returns will continue to be a challenge for the retail industry, especially as e-commerce continues its upward growth. However, there are clear, data-driven strategies that retailers can implement to ensure that customers are happy with their purchases. CI empowers brands to truly understand their customers, optimize the customer journey, and build meaningful, long-term customer relationships. With in-depth insights into the company's most valuable customers, marketers can deliver personalized experiences that cultivate brand loyalty, minimize returns, and increase ROI.

Christopher Hansen is chief operating officer at IgnitionOne, a customer intelligence platform.