Guest Column | April 13, 2022

How Return Policies Can Actually Boost Brand Loyalty

By Nicola Kinsella, SVP of Global Marketing, Fluent Commerce

Customer Loyalty

More than 30% of all products ordered online are returned, which leaves no room for questioning just how important it is for online retailers to optimize the customer return process. The return process shouldn’t be an afterthought, as it is an increasingly important part of the customer journey. The way people make purchasing decisions is oftentimes—67% of the time to be exact—influenced by a brand’s return policy.

With these facts considered, it’s truly up to online brands to focus on ways to not only meet the growing demand for fast, hassle-free returns but to leverage this phenomenon as an opportunity to build loyalty with new and repeat customers alike. There should be three main priorities for online retailers regarding customer returns.

How & Where Returns Happen

It’s a good idea for retailers to embrace digital returns. Traditional pack-and-ship return processes are cumbersome, wasteful, and costly. Digital returns, on the other hand, can help boost brand sustainability credentials and can even help resell items faster. Many brands have been successful at utilizing QR codes on smartphones at drop-off locations, which not only saves the customer printer ink and paper but triggers the brand’s order management system that a product is on its way.

When it comes to returns, convenience is king. While accepting online orders in-store is increasingly a minimum requirement where possible, some retailers now also accept returns at third-party locations. It’s important to consider, however, the added logistical layer required to get products back into the hands of the original seller. When items have to be shipped somewhere for processing, retailers must also work out the most effective logistics routes to minimize staff and transportation costs, as well as reduce their environmental impact.

Making Returns A Personalized Endeavor

We know that the return process plays a huge part in a customer’s purchase decision and long-term loyalty, which is why it’s key for retailers to stay proactive in their communication with customers. Retailers should prioritize sending updates to payment status via text or email. This type of transparency not only helps avoid additional support calls from people frustrated about the status of their refund but also can build brand trust and maintain customer satisfaction.

It’s interesting to know that 19% of customers will deliberately order multiple variations of a single item, such as different colors or sizes, to then choose the item that suits them best and return the rest. Brands also can use their order management system (OMS) to identify purchasing patterns by different customers, even flagging customers with high return levels. This information can help to effectively predict the potential level of returns and avert any excess stock replenishment.

In a similar vein, brands also can offer different return policies for high-value customers, like loyalty reward program members, to maintain greater loyalty. This is often a useful tool even if these loyal customers have high return rates. Retailers should avoid penalizing or even blacklisting loyal and active customers when possible.

Minimize Return & Resell Costs

While it’s true that all returns must be quality-checked before they can be re-released as sellable inventory, information collected by the customer can inform this process and help turn inventory around faster. According to Nosto’s 2021 eCommerce Return Rate Report, 80.2% of returns happen because the product is simply damaged or broken, and the customer is forced to send it back, 64.2% of returns are because the item did not match the description and 37.2% of items were sent back because the customer didn’t like the item. Understanding this information before receiving the item can help direct the product in the right direction and help restock or revert inventory quicker.

Similarly, the speed at which returned products can be resold also depends on the work that needs to be done on each item to get it back into a sellable condition. From washing and ironing apparel to recasting jewelry, tracking items’ condition and status, and working hard on the efficiency of the quality processes can have a significant impact on sales.

Ultimately, today’s savvy consumers are becoming more familiar with returns processes and will use their experiences to inform future purchasing decisions. The key point for retailers is the way they address unwanted purchases is just as important as how well they attract customers in the first place.

About The Author

Nicola Kinsella is SVP of Global Marketing at Fluent Commerce.