Returns are no longer just a cost of doing business

It’s no secret that returns are a growing concern for US retailers. The results of Art State of the Industry: Giving Back as an Engagement Strategy survey published by Incisiv and sponsored by Appriss® Retail, shows that 91 percent of respondents report that revenues grew faster than earnings during the past year. However, only 29 percent of retailers have an end-to-end returns strategy. Even more troubling, only 23 percent use bounce information to make smart decisions about customer engagement.

Why do so many retailers treat returns simply as a cost of doing business? What should they be doing instead to use customer returns as an opportunity to engage and delight their consumers? Let’s dive in.

Start with a strategic revenue review

Although 64 percent of retailers admit that returns should be addressed, there is a lack of executive ownership of the problem. In fact, only 27 percent of survey respondents have a manager who is responsible for overall profit impact. Moreover, 69 percent of respondents indicated a lack of understanding of the main reasons for their return. An effective returns strategy starts with establishing clear responsibilities for the process, coupled with a solid understanding of why consumers return products.

Make the return experience as rewarding as the shopping experience (if not more so).

Returning shoppers are already familiar with and at least somewhat invested in the retailer’s brand. The return experience can make or break that relationship. A bad experience won’t just cost you revenue from the current purchase; the value of any future purchases may also be forfeited. Added to the damage is the cost of acquisition to earn another customer in place of the lost one. In general, retailers are better off retaining the customers they already have by making the return process as easy as possible.

There’s a caveat, though: blanket, one-size-fits-all return policies are becoming too expensive – and risky – for most retailers. While standardized return policies protect the retailer, they also tend to penalize and discourage high-priced shoppers who request exceptions. A better option is to develop a flexible return policy that uses artificial intelligence to learn previous buyer behavior and make recommendations regarding return transactions, additional offers or incentives. Unfortunately, the survey found that only 14 percent of respondents currently use a flexible AI-assisted returns strategy, although 59 percent are looking to implement one in the future.

Use technology to engage customers during the return process

Today’s AI-enabled smart technology enables retailers to analyze customer transaction data in real-time to offer tailored return policies that help attract, not repel, consumers. For example, when a shopper initiates a return online, a retailer can minimize the impact by offering incentives, discounts or one-time offers to encourage the consumer to return in-store. Studies shows that consumers are more likely to spend their returns while in-store, but more importantly, the retailer eliminates most of the logistics costs of returns. The in-store transaction is a win-win for the buyer and the retailer.

Better yet, use pre-sale tactics to minimize returns

Seamless, personalized returns processes are one thing, but consumers – and retailers for that matter – would be happier if they didn’t have to make returns at all. In addition to offering real-time incentives at the point of return, technology such as Appriss® Engage can also be used to customize the purchase process to minimize returns. Offering incentives to encourage consumers to visit a nearby store to try on an item in their cart, rather than buying multiple sizes only to return the ones that don’t fit, is just one example that can help reduce returns. The software can also detect and intercept high-risk purchase anomalies, such as out-of-order items, and apply customized order and return rules and incentives to reduce the risk of returns without disrupting the buyer’s journey.

Learn more

Download full State of the Industry: Giving Back as an Engagement Strategy report to view the full survey results and analysis and get more ideas for building an effective return strategy.