The Silver Lining of Holiday Returns

Retailers work year-round to ensure a successful peak season and drive the biggest spike they can. But as sure as night follows day, a spike in sales causes something else too: more returns.

Managing the uptick in returns can be a hassle, and what’s even more difficult is watching hard-earned holiday and year-end revenue being rolled back throughout January. This process can be very frustrating, but it’s not all bad news. In fact, there are a number of reasons why the right returns strategy can be a net-positive for online and multichannel retailers, especially following the holiday season.

Returns are one of the big three “moments of truth” in the shopper journey. The first is customer acquisition. When it comes to the holiday season, this is when the time and effort put into strategic marketing pays off. The next is customer conversion, where a dedication to optimizing the online shopping experience increases the chances of turning browsers into buyers.

The last big moment of truth is returns, which have become a critical touchpoint in the shopper journey that retailers can and should use to drive loyalty. This is especially true following the holiday season because there will be many people who are exposed to a brand for the first time. This is the result of the work put into customer acquisition and conversion to make the season a success.

One thing that makes holiday returns different from returns being made throughout the rest of the year is the two-for-one opportunity that retailers have to build loyalty with both gift givers and gift recipients.

While only a customer or gift giver will be exposed to the first two moments of truth in the shopper journey, returns are different. A customer or a gift recipient could be the one making a return. In fact, a recent study from Oracle Retail found that 77 percent of consumers plan to return gifts this year, with nearly 20 percent expecting to return more than half of the presents they receive.

The bottom line is that retailers need to make returns a pleasant experience for both gift givers and gift recipients. Ensuring a positive returns experience can be the difference between a one-time shopper and a loyal customer who trusts a brand and will continue coming back time and time again. Returns can be even more critical when it comes to winning over gift recipients, who may not have been exposed to the brand previously. With only one chance to make a good first impression, creating a seamless process for gift recipients to make a return is extremely important.

Most online retailers haven't put much thought into gift returns yet, but doing so this holiday season could make a significant impact in retaining hard-earned revenue. Catering to returns being made by a gift recipient starts with one simple question asked at the beginning of the online return workflow: “Are you returning a gift?”

That one simple question allows a retailer to customize the return process for gifts, which can make a big difference in the customer experience and take a significant step towards creating stronger customer loyalty.

There are a few reasons why people may feel awkward returning a gift from someone, which can often result in them not attempting a return at all. That’s a huge missed opportunity for retailers to engage with someone new and earn a happy customer. However, it’s a situation that can be avoided by making a few changes to the return workflow that allow gift recipients to return items independently.

For example, by knowing the returner is a gift recipient, retailers can direct them to look for the order number on a gift receipt and/or ask them for information like the original purchaser’s name or ZIP code. That way, they can match the gift with the original purchase record and allow the gift recipient to swap for the right size, fit, color — or ask for credit and get something new completely — without ever having to tell the gift giver.

The holiday season is approaching fast, but there’s still time to review and improve returns strategies before the influx begins. Making sure returns are a pleasant experience for everyone, including gift givers and gift recipients, will allow retailers to create loyalty, win long-term customers and make the upside of their holiday efforts even bigger.

Eduardo Vilar is founder and CEO of Returnly, a post-purchase payments company that helps online retailers and brands bring frictionless returns to the modern shopper.