Retail returns are dangerous business, eating into your bottom line and damaging your customer relationships. Despite industry awareness, many companies are still struggling to reduce their return rates—CNBC reported that returns hit an average of 16.6% in 2021, growing from 10.6% the previous year.
With up to $761 billion of merchandise being sent back to merchants annually, this is a costly problem — but the solution could be free.
One effective way to reduce the risk of returns is by increasing the consumer’s confidence in their purchase. Tap into your network of engaged customers and have them give more context to your product through user-generated content (UGC).
What is user-generated content?
Most brands have realized the power of content in recent years, whether it’s a slick marketing campaign or informal social media engagement. User-generated content can be equally powerful, but it takes a different approach: Instead of you creating material about your product, you let your customers do it for you!
UGC can refer to the customer reviews and pictures that users post directly to your platform, commonly shown on the specific product page to help guide prospective shoppers. It also includes the social media content that customers create about your brand or goods.
Traditionally, UGC refers to material created by unpaid contributors, but influencers and brand ambassadors can also produce UGC to a similar effect.
Why should you encourage user-generated content?
Consumers are turning a more critical eye towards brand communications because they know that a company wants to position their product in the best light.
On the other hand, fellow shoppers appear more trustworthy; a recent study by UGC platform Tint found that 72% of consumers believe that reviews and testimonials from other customers are more credible than brands’ own communication, and 76% have made a purchase because of a recommendation.
These reviews are particularly helpful when it comes to returns because they give customers a three-dimensional view of the product. Customer pictures allow shoppers to see how an item looks in different lighting, on different body types, and at scale within a real-life context.
For other customers, this information can be very useful in determining whether the product is an actual match for what they’re looking for, reducing the risk that they purchase something that won’t meet their needs.
This has a real impact, as shown by fashion brand GANT, which reported a 5% reduction in returns when it partnered with Bazaarvoice to implement a UGC strategy. Plus, user-generated content and photos like these offer a great way to offer a glimpse into how products like apparel will fit, if you can’t leverage virtual dressing room tools on your site.
Additional benefits of user-generated content
Not only does UGC provide greater context for customers, it also demonstrates that a brand is connected to its audience.
When shoppers see that customers are making the effort to engage positively with your brand post-purchase, it suggests that they are loyal and that your company is worth returning to.
Research from Bazaarvoice and the Center for Generational Kinetics found that 86% of millennials feel that UGC is a good indicator of a brand’s overall quality of service and product.
From a business side, feedback from UGC can be helpful for future product development and marketing initiatives. If products are getting a consistent critique, the brand can use that insight to adjust future product development. Likewise, if customers are loving a particular scent or print, brands can incorporate that into future collections.
How to incentivize UGC creation
You can’t produce UGC yourself, but you can encourage its production.
UGC platform Offerpop found that over half of customers want brands to tell them what kind of content to create, yet only 16% of brands do this. Show customers what kind of content you’re looking to promote by displaying UGC prominently on your website. Include it on relevant product pages and feature customer photos in a separate carousel to promote engagement.
Consider including a highlight reel on your homepage, so that every visitor sees your active customer base, and share UGC on your social channels, so you can interact directly with fans of your brand and reach a larger audience.
Next, reduce any friction involved with UGC. Invite customers to leave a review in post-purchase communication, providing clear links in follow-up emails and SMS messages.
Physical shipments could include a QR code that takes them directly to a “Submit a Review” page, for easy follow through. Consider developing a marketing campaign around your customer contributions and share the relevant hashtags with your community, so that you don’t miss any positive posts.
Other customers may need a more direct incentive. One approach is to reward the customers who produce UGC for you. Give out rewards for each piece of UGC submitted or for reaching specific milestones, e.g. 10 reviews.
Example rewards might include free shipping, a one-time discount, early access to an upcoming sale or free access to a loyalty program.
Gamifying the system can be a fun way to keep shoppers involved and you can encourage participation by launching contests or giveaways, tied to sharing UGC on social media.
In exchange for rewarding one lucky winner, you could get thousands of consumer photos, videos and reviews.
Leveraging influencer partnerships
In addition to organic UGC, brands may want to explore formalized arrangements with influencers and other content creators.
One benefit to this is that you have a greater degree of control over the content, specifying which items you want included and which individuals you want to work with. You can also connect with a much larger group of prospective customers by tapping into someone else’s network, instead of your existing market.
These partnerships do require more investment, both in terms of time and resources. Identifying who is the right fit for your brand will require market research; just because someone has a bigger audience, doesn’t mean it’s the right fit for your product.
More established influencers can command high pay rates, while those with smaller networks may agree to work for less compensation or in exchange for free products.
One thing to remember is that it’s critical to walk the line between positive feedback and overt advertorial; the benefit of UGC is its authenticity, so you want to be sure that you’re partnering with someone who genuinely loves your product and will promote it believably.
Key user-generated content takeaways
Reducing returns doesn’t always require adjusting the product itself. By leveraging your existing community of customers, you can make it easier for shoppers to fully understand what they’re buying and make the purchase with confidence.
This will reduce the risk of a bad surprise when they receive their product and therefore the likelihood of a return.
Whether you use existing customers or partner with influencers, UGC is an effective way to show your product in various settings and allow consumers to get a clearer idea of how it will function in practice.
Just make sure you’re doing your part to promote UGC throughout your brand environments, to maximize its impact and value.
Looking for other ways to reduce your return rates? Get a demo of Loop to learn how we can help.