According to the new Retail CFO Outlook survey from accounting firm BDO, 46% of retailers are accelerating digital transformation plans in response to the disruption over the past 12 months, with 44% taking advantage of new opportunities for product/service innovation. One focus area retailers tend to overlook but that has potential for significant ROI is digital returns. After all, the customer journey does not end with a purchase, which is particularly true with fewer in-store visits and returns increasingly becoming the norm for customers shifting to online-first engagements. According to Happy Returns, about 30% of products from online sales are returned, about three times the amount of products returned when purchased in-store.
With returns on the rise, so too are customer expectations for a frictionless journey that goes across interest, purchase and sometimes return. Modern amenities include pre-paid return labels, multiple drop-off locations, included return packaging, easy-to-follow instructions and limited restrictions. In the 2020 State of Returns study from Narvar, conducted in September, 76% of first-time customers who had an easy/very easy returns experience said they would shop with the same retailer again, while 33% of repeat customers who had a difficult/very difficult experience said they would not do business with the same retailer. Digging deeper, customers defined “very easy” returns as those with convenient drop-off locations, prompt refunds and prompt notifications about the status of a return. Overall, convenience and communication were cited as top reasons for continuing to shop with a brand.
Returns and a Personalized CX
Because an easy returns process is important for customer retention, and ultimately for driving revenue, it is vital that a returns strategy deems the process integral to the overall customer journey. The process, in that light, is an opportunity for brands to delight a customer with a personalized customer experience (CX). This could include, for instance, proactively letting the customer know the closest drop-off location, offering a discount similar to the item being returned but perhaps in a different size, color or style, or sending an email thanking the customer for the purchase and providing step-by-step instructions for how to complete the return. To personalize the experience, brands should know – without having to ask – a reason for a return to avoid an irrelevant message or action. For instance, according to the Narvar survey, 60% of consumers said that they “bracket” purchases (buying a product in multiple sizes, colors, etc., with the intention of returning all but one). If a “bracketing” customer initiates an online return, a brand may be mindful to avoid sending an apology email, for instance. A more personalized – and relevant – interaction might entail acknowledging the practice at the point of sale and including pre-paid return packaging.
A personalized returns experience helps a brand differentiate in the suddenly return-friendly environment that almost seems to encourage returns. Some major retailers, Amazon, Walmart and Target among them, are not just easing restrictions but going so far as to have customers keep products marked for return, thus saving on processing, shipping and easing the strain on logistics systems. Not to mention, processes like these also can help to reduce environmental impact by eliminating excess packaging and transportation needs. The customer, too, benefits from avoiding an at-times frustrating experience – waiting in line, having to drop off the product, postage, etc. With this in mind, relevant messaging is key to maintaining a frictionless experience. A brand must be transparent about any changes to return policy. If having the customer keep the merchandise is preferred, a brand should communicate this to the customer before the customer tries to initiate the merchandise return. Beyond that, given that sustainability is rising in importance for consumers and brands alike, offering proactive communication around their environmental and social policies – in ways that are linked to the core brand promise – can inspire consumer confidence and loyalty. Transparency and proactive communication hold true for any part of the returns process – status updates, refund confirmation, tracking information, any fees, etc.
Personalization and the Single Customer View
If creating a frictionless returns experience results in satisfied, loyal customers, it begs the question why some brands struggle with integrating returns into the end-to-end customer journey. One culprit is siloed data, processes and departments that cloud a single view of the customer. If, for example, returns for online products are processed differently than returns for in-store products, a customer may easily have a disjointed experience. Sadly, this is not a hypothetical situation. According to the National Retail Federation’s 2020 report on consumer returns in the retail industry, 43.5% of companies have different departments managing mail-in and in-store returns. (Another 29% of companies did not know).
This is a lost opportunity to know as much as possible about a customer. When a brand processes an in-store or mail-in return, it is an opportunity to capture valuable first-party data customer data; a reason for a return, details about the product, consumer preferences and PII such as physical and email address, phone number, etc. If the returns are processed as a silo, brands are missing the opportunity to better use data to improve a customer journey. Think of a customer who makes an in-store return who then conducts an online session on the brand’s website. With a single view of the customer combined with a real-time decisioning engine, a brand is able to respond with the most relevant information – a message, content an offer or other action – that is always in the context of the customer journey. In its 2020 report, the National Retail Federation makes a point of saying that managing returns has a direct impact on the experience perceptions of customers.
Brands invested in delivering a personalized customer experience must include returns as part of any calculation for a frictionless experience that spans the entire customer journey. A poor returns experience at the tail end of an otherwise exemplary buying journey will quickly erase any earned goodwill. Conversely, a positive return experience may undo any ill will from a negative experience at another point in the customer journey.
Providing a customer with a personalized returns experience that is relevant to a specific customer journey starts with a single customer view. Brands that know everything there is to know about a customer have a differentiated advantage with which to transform returns into another opportunity to demonstrate to a customer that you value the relationship beyond the sale.