Over 20% of online products end up getting returned each year – and managing returns effectively is a science.
Do it well, and you can recapture lost revenue and customers, improve your company’s sustainability, save costs on return shipping, and build confidence in your brand.
Do it poorly, and you’ll see a high amount of customer churn, negative feedback, extra expenses on reverse logistics, and contribute to landfill waste.
If you want to optimize your returns management process, it’s important to be aware of some of the most common mistakes that merchants make with their return policies. Setting smart policies and putting strong processes in place can streamline the returns process and help you generate recurring revenue from returning customers – so here’s what not to do:
Don’t write a return policy that customers need a legal review to understand.
Your return policy shouldn’t include three pages of legalese. If a customer can’t understand your return policy in plain language, they’ll quickly lose confidence in your brand and will likely choose not to buy from you at all in the first place – costing you sales that a better return policy would have encouraged.
When drafting your return policy, just a few lines should suffice. Your return policy should demonstrate how long customers have to process returns, which products are returnable, and under what conditions. Brooklinen offers a great example of a clear but cohesive return policy that answers all of its customers’ questions and provides clear next steps through CTA buttons on the landing page.
Don’t forget to collect data on why the returns are happening.
Returns happen for all kinds of reasons – in some cases, there was a product defect or it was the wrong product; in others, the item was too small or just didn’t match the customer’s expectations.
If you’re simply processing return requests without getting more data around why they’re happening, you won’t have the insights to optimize your processes so that you can reduce your return rate in the future. For instance, by discovering that customers frequently return tops from a certain apparel brand you carry, you can include the disclaimer “runs small” on your product page, ensuring that customers are likely to order the right fit in the first place.
Make sure to include a multiple choice checklist that customers can use to share their return reasons, so that you can analyze trends in returns across categories and items and use them to shape your strategy accordingly.
Don’t make the customer wait for support to initiate a return.
Many merchants route all of their return and exchange requests through traditional customer support channels, including email and phone support. This tactic can lead to long delays in return processing, adding to the customer’s frustration – and it puts a heavy burden on your customer support agents to respond to all of the tickets regarding returns and exchanges.
Instead, consider using a platform that lets customers process their return requests via self-service. They’ll be able to get the tools they need instantly to process their return or exchange, delivering a great post-purchase experience while reducing the burden on your customer support team.
Don’t automatically ask for all items to be returned.
Just because a customer doesn’t want an item, it doesn’t always mean you should ask them to send it back to your warehouse.
The average return costs retailers two-thirds of the original price of the item in labor, transportation, and warehousing costs – and often, the item can’t even be resold, and ends up in a landfill.
Instead of asking for all return requests to be sent back to your warehouse, put conditional logic in place that determines the right step for the product, based on the item and its condition. While a new-in-box speaker can be sent back for a return, if a customer asks to return a pair of last season’s sandals, you might provide a refund and tell them to keep or donate the shoes. Using a returns management platform like Loop can automate this process, helping you find the most cost-effective and environmentally sustainable solution for each item.
Don’t leave money on the table – optimize for exchanges.
Although you don’t want to make it difficult for a customer to get a refund if that’s what they want, you could be losing out on a lot of retained revenue – and the chance to connect with that customer again in the future.
Instead of automatically processing a refund for an unwanted item, using a platform like Loop gives you the insights to understand why a customer is returning an item, so that you can automatically offer customized recommendations that meet their needs. If the customer didn’t like the swimsuit color, for example, your solution can recommend the same product in a different color from your live inventory, enabling the customer to make a seamless exchange with no need for another transaction.
While a customer may be happy that their request was satisfied if you offer a no-questions-asked refund, you’ll likely never see them again. Optimizing for exchanges enables Loop customers to retain 40% of revenue from returns, and preserve recurring relationships with those customers instead of seeing them churn.
Don’t make these mistakes when it comes to managing your product returns – by setting up an automated returns management solution that integrates with your online storefront and the other tools that you use, you can improve the customer experience, save money on reverse logistics, and retain more customer revenue and relationships.
Want to learn more about how Loop can help? Sign up for a demo.