Returns - How to get it right for you and your customer
Returns – if you’re running a product business then returns are part and parcel of your sales process.
Depending on which channels you sell in then your returns policy and process can be a make or break part of customer purchase decision making. If you think about what you consider when you’re buying for you then you’ll know many brands are trying to navigate the tricky balance of convenience and cost as part of their value proposition.
Online selling and customer propositions have massively evolved over the last 10 years:
- Customers expectations on returns has been accelerated by the pandemic
- Omni channel is a much bigger part of how consumers interact with brands
- Delivery and returns (and any cost involved) has become a big consideration with a large amount of customers saying they are unwilling to pay to send back unwanted goods.
How do you sell to your customers?
If you sell face to face with your customers then you will have experienced first hand how your returns policy may influence them when buying and had feedback on how it works for them. If they can see the product and make decisions there and then you can offer a goodwill policy for change of mind alongside their rights should anything go wrong post purchase. Having spent the first few years of my career in stores I can recall some amazing interactions with customers and some not so good ones depending on what they wanted from the process.
Online selling adds a level of complexity
With online selling you’ll know there is a cooling off period of 14 days to allow returns to be triggered if the item isn’t suitable, when customers can’t touch and see the product beforehand then they will be putting trust in this process. The ease of ordering online however has meant that change of mind returns have increased in volume along with the cost of managing it – handling additional parcels and checking items are still good for sale all takes time, space and money to manage.
But is the price of customer convenience one for retailers to pay?
Free returns is a hot topic at the moment, research from Metapak shows that 76% of customers are unwilling to pay for returns but big brands are now starting to charge because of the operational cost of managing the volume. You could argue that if customers want to shop at home and if there is nothing wrong with the items they have received then they should also pay to send back in the same way. – You wouldn’t ask for a contribution to your fuel costs for refunding in the physical store you bought from so why wouldn’t you pay towards postage or courier fees?
Could returns be a competitive edge?
Some see offering free returns as the decider if their brand offers similar products to others and it sets them apart in their market. It could be a part of your business values to make all your customer journeys pain free so you can shout about it .
How do you manage the cost if you do this?
Firstly – do you capture data on why your customers return? Is is certain products? Fit or quality? taking on this feedback as part of your buying strategy could help you to reduce the amount of stock that comes back.
Secondly – you need to calculate how much your returns are costing you. It could be the percentage of sales you see coming back + your time to manage + any fees you are paying to facilitate the process. Knowing the true cost is half the battle to managing it right for your brand.
Thirdly – is this being adequately covered by your pricing? A key issue I find when discussing pricing with clients is that they don’t think about how their customer journey is sucking up profit margin in the background of their business. Looking at your costs and estimating what you could be investing in returns is crucial (and it is an investment if you think it is important to your customer).
You can review your pricing to allow for an element of returns in your margin, that way you won’t be losing out and your customers will be happy bunnies. I have developed calculators to include things like this with brands who want to make sure they are making the right profit.
Lastly, check what your customers would actually be happy to do. If they don’t mind losing some convenience so you can use the cheapest method of return (and you foot the bill) then it might be something that works for you both.
Review your returns cost and processes!
If you find that the cost is too much then it’s time to review what you are offering. You could find a cut off level for orders (free returns over a £ limit) or test if your customer would be willing to take on some cost if it is low. Understanding your customer’s position on this will be key to unlocking what could be right for both your business and their experience with your brand.
Whatever you decide this is a big one for customers and offering what you feel is right for your brand will be important to how you show up to them. Knowing that the big retailers are struggling with their margins means you know you’re not alone if you are too, they are making bold steps to protect their cash flow and you need to assess how processes like this could be costing you.
If you need support with your review and would like to talk it through with an expert then I’d love to help you. We can talk about how products brands can give maximum value within their customer journeys and map them out so we can make sure your costs are supported financially. You can offer what you customer wants with some analysis and cost checks and how it could really boost your brand value proposition.