Customer retention doesn’t begin after the point of purchase; it’s part of the entire customer journey, starting from the moment a customer experiences their first touchpoint with your brand.

Think about it this way: There’s a symbiotic relationship between customer retention and customer experience (CX), and understanding how to leverage this relationship is key to maximizing the potential of your current (and future!) customer base.

This is more important than ever, considering the high rise of acquisition costs today. You need to make the most out of the customers you do have.

For example, before brands were focused entirely on the conversion of a new customer. Now, they’re realizing the importance of the customer journey after the point of purchase: from delivery all the way through a potential return or exchange.

You can’t afford to lose customers anymore, so instead of prioritizing getting an item into the hands of a customer, the focus is on making sure customers actually use the items they purchase and see the benefit of them. That way, they’re more likely to stay loyal and promote the brand to their peers.

And yes, returns play a significant role in this journey.

Historically, returns have been viewed more as a logistical necessity than a strategic opportunity to enhance CX. 

Typically managed by support teams, returns are frequently perceived as a cost center rather than a touchpoint that can significantly influence customer loyalty and retention. This perspective overlooks the fact that a well-handled return can be the start of a new chapter in the customer’s relationship with a brand, not the final page. 

There needs to be a shift in the narrative about returns, which are a critical component of the customer experience.

By doing so, brands can transform returns from a mere transactional interaction into a meaningful opportunity to reinforce trust, demonstrate commitment to customer satisfaction, and ultimately, foster long-term loyalty.

Today’s Challenges with Lifetime Value (LTV) 

• Just 35% of business revenue comes from new consumers, while 65% comes from existing customers, on average.The average customer retention percentage in e-commerce is around 38%, meaning just three out of 10 customers stick with one single brand for more than one year.
• 49% of customers who left a brand to which they’d been loyal in the past 12 months say it’s due to poor CX.
• 15-40% of online purchases are returned, and many brands don’t have systems in place to recapture this revenue.

What This Data Tells Us

Earning and Keeping Attention is Harder Than Ever Before

It’s expensive to get new customers, and even harder to keep them interested. You can’t base your business strategy based on what was working well three years ago. 

This struggle for attention is further compounded by tightening margins as the industry shifts away from blanket policies like free returns and exchanges, which were more feasible when the economy was stronger.

While a one-size-fits-all return policy may appear simple on paper, the reality is that a more modular and tailored approach is often necessary to navigate the complexities of the current market. 

So what can you do?

As merchants seek to recoup costs, the need for a more nuanced approach to customer engagement is evident. You have to shift away from offering the same experiences to every shopper, and instead prioritize a segment of high-LTV-potential buyers. 

One way you can do this is by differentiating between regular and best customers, so you can offer perks like free returns to your most loyal shoppers. This approach not only helps mitigate costs but also addresses issues like fraud and abuse.

Operators Aren’t Considering How Returns Play a Role in CX

Despite their importance, returns are often not fully considered by logistics operators as a critical component of the customer experience. 

Neglecting this aspect can lead to missed opportunities for building customer loyalty and trust. Here’s how operators can better integrate returns into their CX strategy:

• Empower Frontline Staff: Train in-store associates to handle returns with empathy and efficiency. Their interaction with customers during the returns process can significantly influence overall satisfaction.
• Leverage Technology: Implement user-friendly return management systems that streamline the process for both customers and staff. A smooth digital experience can enhance the customer’s perception of your brand.
• Feedback Loop: Use returns as a feedback mechanism to identify common issues or trends. This can inform product development, inventory management, and customer service improvements.
• Clear Communication: Ensure your return policy is transparent and easily accessible. Clear communication can prevent misunderstandings and reduce customer frustration.

The LTV Opportunities You Need to Know About

The challenges in customer experience and returns management don’t have to hinder your efforts to improve LTV. Just check out these opportunities:

• 60% of consumers say they’ll become repeat customers after a personalized shopping experience.
• Customer-centric brands report profits that are 60% higher than those that fail to focus on CX.
• 41% of customer-obsessed companies achieved at least 10% revenue growth in their last fiscal year, compared to just 10% of less mature companies.

Strategies to Leverage LTV Opportunities

Take a Holistic Approach

Understanding your customer base is the first step. From there, you can determine which tools are available to enhance the experience or try new approaches.

Our recommendations for taking a holistic approach:

• Understand Your Customers: Assess the current state of your customer base and understand their behavior. Identify the attributes of your best customers and those who may pose risks, such as potential for fraud or high return rates.
• Tailor Your Approach: Use the insights gained from your customer analysis to tailor your post-purchase and returns strategies. This could involve personalizing the shopping experience, optimizing your return policy, or offering incentives to high-value customers.
• Experiment and Adapt: Implement small changes and experiments in your CX and returns process. Monitor the results to understand what works and what doesn’t. This iterative approach allows you to improve your strategies based on real-world feedback continuously.
• Leverage Tools and Technology: Use tools like Loop to streamline your returns process and enhance the overall customer experience. These tools can help you implement your strategies more effectively and efficiently.

By analyzing each step of the customer journey and optimizing your strategies accordingly, you can unlock the full potential of LTV and drive sustainable growth for your brand.

Use Returns to Improve CX Across All Customer Touchpoints

It may sound a bit confusing to think about returns before a customer even makes a purchase, but we promise there’s proof to back up this suggestion. 

First, though, here are the ways to introduce returns earlier in the buyer’s funnel:

Integrate Returns With Your Help Desk

• Integrate returns with your help desk to start the process directly from chat, eliminating manual back-and-forth communication.
• Automate returns and exchanges from live chat or help centers, allowing your customer service team to focus on more personalized, high-priority tickets.

Improve Tracking Transparency

• Order tracking is crucial for online shopping. A lack of transparency can lead to a loss of trust.
• 91% of consumers actively track their packages, with 39% tracking once a day and 19% tracking multiple times each day.
• Enable tracking of returns and exchanges directly from the order tracking page, allowing customers to track their status in the returns process, and reducing return-related support tickets.
• Track by Loop provides automated updates on refunds, exchanges, and carrier issues, reducing the need for customer inquiries.

Reward Your Best Customers With Personalization

• Personalization extends beyond marketing to backend operations, including exchanges and returns.
• Automate personalized return experiences to save your team’s time while offering unique customer experiences.
• With Loop, you can build robust workflows with a wide range of conditions and actions to reward your best customers. For example, you can incentivize your best customers with actions like waiving the return fee for VIP loyalty program members.
• Offer extended return policies or additional bonus credit to loyal customers, enhancing their experience and retention.

Set up Return Bars

Customers demand convenience and flexibility, especially when it comes to returns. Return bars are a great way to meet these demands. 

A return bar refers to a physical location within a retail store where customers can process returns or exchanges of merchandise. With the right software, online brands can set up returns processing at large retailers like Petco, Ulta Beauty, Staples, and more. 

How can you set this up?

In case you didn’t know, Loop + Happy Returns play nicely together.

Basically, when a shopper uses the Loop portal and the brand is also partnered with Happy Returns, they can choose to drop off their return box-free and label-free at a return bar, or opt for a traditional return with a printed label and box.

Most shoppers prefer the return bars because they are hassle-free, requiring only a QR code and the items for return. This approach not only improves the customer experience for reverse logistics but also saves the brand on shipping costs and increases sustainability. 

Happy Returns consolidates unboxed returns from their return bars into one large shipment, significantly reducing the shipping expenses for the brand compared to handling individual returns.

Proof These Solutions Work

• Loop merchants see up to 80% revenue retention by promoting exchanges, identifying fraud, and driving customer loyalty through simplified returns.
• Loop merchants retain almost 25% of their revenue on returns, and generate an average of $1.30 in upsell value per return. 
• 96% of shoppers say that retailers who offer flexible and extensive return policies care more about them as customers.

Customer Retention Predictions 

“As cost pressures and profitability become a bigger emphasis across the industry, brands will need to optimize every area of the shopping experience. We expect brands in the new year will invest more intentionally in leveraging returns data to inform their merchandising and product development. For example, using returns data analytics to understand which products shoppers return the most and why, which helps prevent unnecessary returns before they happen and better meet customers’ expectations the first time around. It also helps them identify how returns impact key customer retention behaviors, including average time to repeat purchase, average order value, and more.”

Want to learn how Loop can help?