Keeping Your Customers Happy with Returns Reduction

Product returns have always been retail’s “dirty little secret,” with the issue frequently being de-prioritized within retail enterprises. The result? Returns have become one of retail’s most expensive problems. In 2020, returns made up 10% of total retail trade—a $428B problem. The financial implications of returns are finally being recognized, but retailers have big blind spots when it comes to returns, which also negatively impacts the environment and customer experience.

Customers Buy to Keep

Customers have come to demand fast, free, and frictionless returns as a fail-safe in the event a product doesn’t meet their expectations. Retailers have not only absorbed the additional cost, but many have implemented a few measures to ensure an exceptional returns experience for the customer, such as improving refund time or instituting omnichannel programs like BORIS (buy online, return in-store). But even the best returns experience doesn’t make up for the customer’s disappointment of not receiving the product they expected. The ideal customer experience entails the customer keeping the product.

Studies show that 4 in 5 shoppers are dissatisfied with the number of times they have to return products to a retailer.

As it turns out, customers don’t want to be inconvenienced with having to return, even if they want the option to return. Retailers need to turn the question on its head by asking what they can do to reduce returns, as customers are not the cause of returns. While something to acknowledge, return fraud or abuse represents only around 5% of all returns. This leaves 95% of all returns for retailers to focus on.

According to our latest study with Incisiv, 73% of returns are in control of the retailer. The top three return reasons are:

1. 1. Product quality not as expected
   2. Product did not match the website description
   3. Size and Fit issues for apparel; Wrong Item Shipped for hard goods

Unfortunately, most retailers lack the technology and resources to identify returns spikes and diagnose why products are coming back. So, these issues remain unresolved, resulting in continued product returns and compounded customer disappointment. When a customer returns a product, a retailer risks losing the customer’s trust, and consequently, their business. And with most returns occurring due to reasons within the control of the retailer, it’s the retailer’s responsibility to address and course-correct to save other customers from future grief.

The Impact of Returns on Customer Satisfaction and Brand Value

Customer Churn or Customer Attrition

42% of customers will stop shopping with a brand upon multiple retailer-induced returns.

With product returns, you risk customer attrition and the accompanying loss in revenue, not to mention the increased costs of customer acquisition. Additionally, a customer’s reduced frequency in shopping and loyalty lowers CLV (customer lifetime value). Therefore, returns not only have an impact on a brand’s financials through their own cost but also lower revenue through decreased customer retention.

Brand Image and Value

From word-of-mouth to online reviews to social media comments, bad reviews have a habit of spreading. 72% of consumers will post a negative review or rating upon multiple retailer-induced returns. This can easily lead to loss of future customers, in consequence revenue, as well as a decrease in a brand’s value.

Consider the top 3 return reasons within a retailer’s control. Were a retailer to be notified about these issues in real time, they could solve it and salvage their relationships with their customers. When our team created Chief Returns Officer^®,  we knew root cause identification of “low hanging fruit” problems throughout the organization would change the game for how retailers deliver the best experience to their customers.

Returns Reduction Can Keep Your Customers Happy

Returns have a huge impact on customer experience and can lead to a loss of their business. Newmine’s Chief Returns Officer works to reduce returns by using an anomaly detection engine to identify the root cause of returns using sentiment analysis of customer feedback. Understanding why customers are returning their purchases allows the retailer to fix the issue, preventing future returns and customer dissatisfaction.

For example, let’s say customers are returning a sweater because it was not the color they expected. Chief Returns Officer diagnoses this issue and sends an alert to the appropriate teams with prescriptive, corrective actions, such as pulling the stock for review against specs or photoshopping the image on the website for more accurate product representation. As a result, fewer customers will have this issue and the brand will retain their business and trust.

Returns intelligence is also key in understanding what your customers want. Using natural language processing, Chief Returns Officer scans through customer return reasons and product reviews to identify how your customers are reacting to your products. This information is not only useful for reducing returns in-season but for managing inventory and planning for the future. Chief Returns Officer helps you keep your customers returning, not your products.

Learn more about retail returns and how to begin your returns reduction journey with our latest report with Incisiv.