How Smarter Returns Processing Can Drive Customer Experience and Brand Loyalty

Twenty-five years ago, I was a store manager at a large Home Improvement retailer and one morning I was called to assist at the returns counter, and made a decision to give a refund to a customer who was trying to return a used and damaged step ladder without proof of purchase.  My employees thought that I was crazy. First, the customer did not have a receipt. Second, the ladder was clearly abused, maybe even had fallen off the back of his truck while driving on the highway. And third, our company did not even stock that brand of ladder in our stores.  Our competitor sold that brand of ladder, and I knew that. 

Why didn’t I tell him no and send him and his broken ladder away? Was I crazy? Perhaps I had not read the company returns policy thoroughly? Maybe I did not drink enough coffee that morning? No…none of those.  Instead, I realized something then that could not be more relevant today.  The customer returns experience can drive brand loyalty, convert shoppers, and increase revenue. 

What do you think that customer did, after I refunded him $79 for his broken ladder that clearly was bought somewhere else?  He shoved the cash in his pocket, grabbed a cart, and marched into the building materials department where he proceeded to load up supplies and spent well over $800 on new material for a job.  I continued to see that customer a couple days every week, shopping throughout the store.  I would estimate, as a small contractor, he spent at least $50,000 in my store that year. Not too shabby a return on my $69 investment in converting a customer, because not only did he spend that money in my store, but also what he did not do was spend that money in my competitor’s store.  Why not?  Because of the returns experience.

Today, even more so than ever, customers are making choices based on company returns policies.  E-commerce is growing exponentially, customers are making purchase decisions on their smartphones, access to goods is becoming easier and easier with 1-click checkout and stored payments. With this increased growth in purchasing, particularly digital purchasing, comes an increase in returns and the need to make the returns process easy, seamless, and painless.

According to Shopify, 58% of shoppers say they are “not satisfied” with the ease of making returns. Poor returns processes and a lack of transparency about the returns policy can cause customers to permanently abandon a brand. Moreover, 72% of shoppers are willing to spend more per order and order more frequently, from online stores with a customer-friendly returns process.

So not only can exceptional returns processes resolve customer pain points – they can actively increase revenue for businesses. The key is figuring out how to unlock these winning customer returns experiences in today’s digital world?

What customers want – and what they don’t

Customers don’t want to be making returns, so businesses can’t expect them to expend tons of energy jumping through hoops to do so. Making the process easy and straightforward is therefore the key to a great customer returns experience. And to achieve this requires one thing: flexibility.  Twenty-five years ago, I would have called this flexibility manager’s intuition. Today, however, we have software to help facilitate and streamline processes.

To support an outstanding customer experience for returns, you need a flexible technology platform that allows you to provide convenient return options that cater to varying customer preferences. Customers must be enabled to begin the returns process in whatever way that suits them – whether through an online portal, on the phone, or across a physical network of stores. 

But these varying customer preferences also create a problem: how do you achieve the flexibility customers demand within a cost-effective system? 

Finding the patterns

The key is to find patterns in consumer preferences and optimize your system based on this information. Understanding the patterns of your customers’ return requests, along with the patterns of those products on how frequently each item or SKU is returned, will allow you to start uncovering opportunities to drive continuous improvement across the reverse logistics ecosystem. 

Going back to my earlier story, many people hear it and then ask me about fraudulent returns, worrying about customers taking advantage of the system. Did the customer in my story know that the ladder had been purchased somewhere else?  Did he accidentally drive a truck over the ladder and then think I’ll just lie and say it broke on the job?  There certainly are people in this world that try to take advantage.  We did our best back then to ask for ID and keep a record on paper of habitual returners.  But today, all of that can be achieved with technology. With limited acquisition costs and very low capital investment, today’s technology is typically a cloud-based, software as a service (SaaS) platform that can be deployed across your entire physical network, enabling consistency, adding value, and providing the backbone for a great customer experience by analyzing consumer behavior. 

There are four key factors in customer returns experience that you should be looking to optimize:

1. Initialization

Understanding where and how your customers want to register their returns is vital for ensuring the experience begins positively.

2. Communication and customer support

Customers want proactive support and ongoing, always-available digital communications. But what are the key touchpoints you should be focused on?

3. Induction

The process of making the actual physical return is pivotal: customers want to expend as little effort and resources as possible, and it must be accessible and easy for all.

3. Crediting and advanced exchange

For customers, the final step of the returns process is receiving their money back, and this can make or break the entire experience. Consideration should be given to data security and fraud prevention.

For a detailed list of questions to consider at each stage of the customer returns experience, Download our Free guide: Redefining the Role of Reverse Logistics for E-Commerce.