In the fiercely competitive ecommerce landscape, retailers must constantly innovate to enhance the customer experience, capture market share, and drive loyalty. For over a decade in retail, personalization has played a key role in commerce and customers respond in kind with their wallets. In fact, Twilio found that over half (56%) of consumers say they will become repeat buyers after a personalized experience. Similarly, McKinsey notes that 78% of customers are more likely to recommend a brand that has high levels of personalization. TLDR: personalization drives revenue for retailers.
Yet one area of retail where personalization has often been overlooked in the past is the returns process. By understanding and responding to individual shopper preferences as well as historical behaviors, retailers can transform the returns experience into a valuable opportunity to foster loyalty and create referring customers and brand ambassadors.
In this article, we’ll look at a few “dials” retailers and brands can turn to create more unique, personalized returns experiences that also protect margins and customer lifetime value through:
Personalized Dynamic Returns Policies
Returns policies can be a significant barrier for online shoppers, especially when they are inflexible (read: not personalized). In fact, around 86 % of global consumers look for retailers with easy product return policies when deciding where to make purchases. In addition, 81% said they would switch to a different retailer if they had a bad experience with returning goods. To overcome this challenge, retailers can implement dynamic returns policies that vary based on shopper segments and purchase history.
For instance, retailers can offer extended return windows for loyal customers or shoppers who frequently purchase high-value items. Conversely, they could set shorter return windows for products purchased during clearance events or for seasonal items with a limited shelf life.
By personalizing returns policies, retailers can strike a balance between protecting their inventory and satisfying shopper expectations. This approach can reduce customer churn, increase repurchase rates, and build stronger customer relationships.
Personalization through Dynamic Return Methods
With 15+ years of dedicated returns and reverse logistics experience, Optoro recommends that every retailer have at least two return methods they offer to shoppers. Without a convenient option (think: box-free, label-free) the returns lifecycle becomes elongated and valuable inventory can get stuck in no man’s land. And since inventory is one of the largest expenses retailers have, maintaining a higher ratio of available-to-sell returned merchandise is critical.
Yet, not all returns methods are created equal, and each retailer needs to understand their shopper’s preferences as well as the costs associated with each method. For example, our research found that 71% of shoppers prefer QR code, hassle-free, drop-off options for returns. If your brand only offers mail-back returns you are introducing friction to the post-purchase experience, as well as the higher cost of one-off return shipping rates.
With the ability to offer dynamic personalized return methods, you can select which customer segments are offered which methods, perhaps reserving doorstep pickup returns for your most loyal customers, or serving up drop-off locations based on proximity to the closest returns location in your network.
Dynamic Pricing for Returns Personalization
If you think about it, dynamic pricing is a frequent practice in retail, a la coupons, promotions, and discounts offered to certain shoppers. Retailers can apply this concept to reverse logistics too by offering tiered or varied pricing for returns.
For example, if you have a customer with an overtly high return rate, you may choose to charge a small amount for return shipping or a restocking fee to discourage them from buying more than they intend to keep. Or you could offer totally free returns for loyalty members and repeat customers who spend a certain amount each year.
Similar to airlines’ frequent-flier programs, savvy retailers are now evaluating returning customers’ data and curating unique experiences while still protecting margins and avoiding a one-size-fits-all approach.
Dynamic Offers & Repurchase Options
Personalization can also extend to the “offers” retailers provide during the returns process. By tailoring offers to different shopper segments, retailers can incentivize exchanges, drive future repurchases, and increase average order value for exchanged items, while still providing a seamless experience.
For example, with the right returns technology retailers can offer the option to exchange an item instead of simply returning. You can also provide exclusive discounts or promo codes for customers returning items with a valid reason for future purchases.
When it comes to exchanges, time is of the essence to re-delight the customer. A shopper initiating a return has already experienced some potential friction with your brand. So making it as easy as possible to find the right product for them is paramount. With a true instant exchange, you can ship a replacement item immediately without requiring a credit card, which introduces friction for the shopper. But in order to do this, you have to first understand your shoppers, and have the technology in place to eliminate the risk for your brand. Learn more about Optoro’s repurchase capabilities.
By delivering relevant and personalized offers, retailers can create a sense of exclusivity and value for their customers.
How to Get Started with Returns Personalization
While personalization can transform the returns process, there are several key considerations for an effective strategy:
Data Collection and Analysis
Retailers must invest in robust data collection and analysis capabilities to understand shopper behavior, purchase history, and returns preferences. This data will provide the foundation for personalized returns policies, dynamic pricing, and customized offers. With a full-lifecycle returns management system, you can tie return reasons to dispositioning outcomes to better understand your shoppers’ returns behaviors and offer a more personalized experience.
Integrate loyalty and customer data tools into your returns software
To enable seamless personalization, retailers should integrate their personalization platform with their returns software. (Bonus points if you can look at this data at any touchpoint in the returns lifecycle versus just one moment in time). This will ensure that relevant shopper data is automatically applied to the returns process and that personalized experiences are delivered consistently across all channels.
Segmentation and Targeting
Effective personalization requires the ability to segment shoppers into distinct groups based on shared characteristics, preferences, and behavior. Retailers should develop targeted campaigns and experiences that cater to the unique needs of each segment.
Continuous Optimization
Personalization is an ongoing process that requires regular monitoring and optimization. Retailers should use customer feedback, data analysis, and A/B testing to continually refine their strategies and improve the returns experience for shoppers while also driving profitability and cost efficiencies.
Returns Personalization: Generating Revenue from Returns
In many ways, reverse logistics is “catching up” to outbound fulfillment, and savvy retailers are beginning to think about returns through the same lens as outbound, including investing in personalizing the returns experience. By leveraging personalization in the returns process, retailers can unlock significant benefits, including reduced returns costs, increased customer satisfaction, improved repurchase rates (often with higher average order value), and enhanced brand loyalty.
I guess you could say when it comes to a great returns experience, it is personal for shoppers.