ECommerce returns are often seen as a cost suck and not treated as the revenue generator that they can be. The idea of offering free return shipping may make you rush over to an excel sheet to crunch the numbers, but that doesn’t have to be the case. Despite what you’ve heard, offering free return shipping can be a very profitable strategy—if done correctly.
There are a lot of misconceptions about returns, so here are some of the most common return myths debunked:
Myth #1: Returns don’t impact the customer experience
Wrong. In fact, returns can make or break the customer experience. For example, when you charge for return shipping, you’re putting the weight of the problem on the customers shoulders. What if they’re returning an item that wasn’t described accurately? Should they have to pay for a company’s shortcomings? Probably not. In fact, 20% of the time a customer requests a return because of a damaged item.
If a customer has to pay out of pocket for a damaged item, it disrupts the post purchase experience—leaving a bad taste in the customer’s mouth. Instead, when a customer requests a return for any reason, take the opportunity to offer a free exchange instead. You’ll build the trust and loyalty of your customers by showing them that you care about getting them the best product.
Myth #2: Free return shipping is too expensive
It’s no secret that returns can be expensive, so offering free return shipping may have you running for the hills. But return shipping shouldn’t bankrupt you. You can save some money by:
– Reusing packaging for returns
– Utilizing cost-effective shipping services
Economical shipping services keep your costs at a minimum. For example in the clothing and apparel industry where returns are lighter weight, USPS is more than likely the most economical way to offer free return shipping.
It’s also important to understand the correlation between the customer relationship and free return shipping. Let’s say that you order a tshirt, and even after purchasing the size the size chart recommended, it doesn’t fit—how frustrating! And after paying $5 for shipping, you see that you have to pay another $5 for return and go through the hassle of printing the label and dropping it off at the shipping facility. You probably won’t shop with that brand again. But if that brand made customer retention a priority and offered free return shipping and exchanges, you might’ve made more purchases with them.
Those continual purchases are what brands need to focus on because customer retention is critical for growth. A 5% increase in customer retention can increase company revenue by 25-95%. That’s worth losing a few bucks on return shipping. Be strategic and remember that when running an eCommerce business you may have to lose a little in the short-term to gain a lot in the long-term.
Myth #3: Returns are due to customer error
Customers are very rarely at fault for returns. In fact, more than 65% of the time, returns are due to merchant error. Whether the product was defective or damaged, it didn’t match the description, or the wrong item was sent, more than half of the time return reasons are not due to customer error.
Myth #4: Returns aren’t a marketing tool
Returns are key to the post purchase marketing experience. Believe it or not, returns foster and build customer loyalty equally as much as other marketing efforts. For some, one bad experience is all it takes to stop shopping with a brand entirely—65% of customers said they have changed to a different brand because of a poor experience.
A customer-centric return policy is a key factor to retaining customers. When your customers make repeat purchases and have positive experiences with your brand and service team, they become brand ambassadors. Brand ambassadors are your cheerleaders and they tell everyone they know about you, so by keeping one customer happy, you gained a few more in the process.
One return or exchange may not drive immediate profit, but it leads to a higher customer retention rate and long-term revenue growth.
Stop overlooking your returns and exchanges
The bottom line is that returns, exchanges, and the post purchase experience doesn’t have to be a cost suck. With the right resources, it can be a key driver of revenue. That’s why we’re here. At Return Rabbit, we take your brand’s mission and values and completely customize the way you do post purchase. Book a demo to see how the Return Rabbit platform can increase your customer lifetime value and retention rates.
