Returns policy personalisation – why one size never fits all

Many of the retailers Clear Returns indexes have just had their highest returning season ever. This doesn’t just damage profits, it hits customer experience and future revenue too.

The problem has become too big for retailers to ignore – which is why there has been a recent flurry of changes to overly generous returns policies.  John Lewis, for example, recently reduced its policy from 90 days to 35 days – a commercial necessity in an environment where a product cycle may be as short as 8-12 weeks. Other retailers e.g. Nordstrom and LL Bean, are rightly asking the question around whether it is sustainable to continue their free shipping and, “return anything you want, when you want to” policies, in an environment where returns rates are 30%+.

 

Returns have a disproportionate impact on the bottom line, so reducing a return rate by just 1 percentage point can boost gross profits by 1.6% and operating profits by a massive 15%.

 

At Clear Returns, our ground-breaking returns technology has helped retailers understand that returns are a fundamental, but overlooked, component of online shopping, and that different customers respond to returns in different ways.

Some shoppers happily buy first, choose later – their high returning behaviour is costly, but it doesn’t impact loyalty.  A very small minority abuse returns policies by returning worn, fake or stolen stock, or by deliberately damaging product – the retailer and the rest of their customers pay a very high price for this. Then there are the customers who hate to return and only do so if the retailer messes up – if they are not identified and treated differently to the ambivalent returner, they will likely take their business elsewhere.

A one size fits all approach to returns policy and customer service isn’t helping customers or the retailer, and is the area where there will inevitably be seismic shifts in thinking in the coming year.

 

The biggest challenge is knowing where to start. This is why Clear Returns now offers ecommerce and multichannel retailers a standalone Returns Insight package as a roadmap.

 

  • Uncover the real drivers behind your returns so you focus spend and effort.
  • Learn how your business compares against the industry so you can judge urgency.
  • Get robust data on the costs of returns to your business, and their impact on profits and customer experience, so you can measure the cost of inaction and identify priorities.
  • Understand your core groups of customers in terms of their attitudes and sensitivity to returns, so you can plan a more targeted service and policy approach.
  • See the areas of returns improvement and keep optimization that your competitors are already addressing.

 

Returns are not inevitable or unavoidable – if measured and understood correctly they can be managed and reduced, resulting in increased profit and increased customer satisfaction and loyalty. With Returns Insights you’ll be on the path to tackling the real causes of your returns in just 6 weeks.

 

IMRG Connect – it’s all about the customer

Some of the UK’s leading fashion retailers joined industry association IMRG and their members for IMRG Connect this week – here Clear Returns deliver their round up of the event.

One key focus throughout the day emerged – the customerHow should customers be measured – in terms of margin or overall value?

There was debate over how customers should be measured – should it be in terms of margin or overall value? WhileQubit discussed customer lifetime value – however this was based only on customer’s purchase history. Astley Clarkethen discussed the work they have undertaken to personalize the online experience for their customers, including personalised product recommendations based on purchase behaviour – which now account for 6% of their online sales.

The day closed with some retailer case studies from ASOS and Moss Bros, where again the customer was the key priority in terms of providing multiple options and tailoring communication. Moss Bros’ Ecommerce Director Neil Sansom told the audience how close they were to achieving a single customer view, thanks to joined up systems delivering real-time information to a their new CRM. Very soon, a customer will be able to walk into their store and the staff will be armed with their full profile and purchase history.
For a true picture of customer value retailers must take returns into account

Clear Returns propose that for a true picture of customer value retailers must take returns into account. A sale is not a sale until a customer decides they are going to keep an item. Therefore by basing recommendations and marketing on purchase history only, you could be missing the full picture.

Certain customer segments, while purchasing full price items regularly, actually return between 80-90% of what they buy. Therefore while they may appear to be your most important customers, in reality they are the least profitable – taking advantage of free shipping offers and promotional codes and costing you more money in the long run. By utilizing this kind of information within your CRM system, you can tailor your marketing much more effectively and profitably.

The new Quarterly Fashion Returns Review in partnership with IMRG was launched

Clear Returns also launched their new Quarterly Fashion Returns Review in partnership with IMRG at the event. This report is designed to give retailers the ability to regularly track a range of key benchmark metrics to help you monitor, assess and address the issues surrounding returns and their effect on profits and logistics. If you would like to receive an exclusive preview of the report then get in touch, and all IMRG members will receive full access.