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GUEST COMMENT Turning returns into customer loyalty with a data-driven approach

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Among the range of important challenges currently facing the UK’s retail sector is the hit on operational efficiency and bottom-line performance created by customer returns. Industry analysis indicates that UK shoppers returned over £4bn worth of online clothing purchases alone in 2022, a figure that is expected to surge by nearly 17% before 2027, with many retailers struggling to get to grips with the problem in a coordinated way.

There are a range of issues contributing to this trend. Key among them is the massive growth in online shopping and the increasing popularity of ‘buy, try, return’ purchasing, with one study revealing that over 75% of UK shoppers check the returns policy before making a purchase. This puts retailers in the difficult position of working to maximise the opportunities for customers to spend in full knowledge that many purchases will also be sent back.

Tim Robinson, CVP, Blue Yonder

If addressed correctly, however, returns can be transformed from a major business headache into a strategic advantage, writes Tim Robinson, corporate vice president, Blue Yonder.

Central to a successful approach is the adoption of the right mindset whereby returns are not just seen as a logistical challenge but a crucial aspect of the customer journey that, in many cases, could benefit significantly from reevaluation and renewal.

Crucial to this process is that retailers ask the right questions about their returns data to gather insights into customer preferences, product performance and operational efficiencies. In doing so, retailers should consider a range of key issues, including:

  • The reasons behind product returns and their frequency.
  • The cost implications of returns on a per-customer basis.
  • Opportunities to resell returned items locally or incentivise exchanges over returns.
  • The effectiveness of current logistics in handling returns quickly and efficiently.
  • The impact of returns on customer satisfaction and loyalty.

Bagging up the benefits
The list goes on, but the key point here is to identify patterns of customer behaviour that inform product development, marketing strategies and customer service improvements. Harnessing the full potential of returns also requires retailers to capture the relevant datasets digitally and integrate them with other customer data sources. This comprehensive view enables retailers to tailor their offerings and services to individual customer profiles, improving satisfaction and loyalty. Advanced analytics can further refine this approach, predicting trends in returns and informing stock management and marketing strategies.

Operations can then track metrics such as time-to-return for different methods and pinpoint process bottlenecks. By connecting returns data to order histories, customer profiles and product databases, informed decisions can be made, such as offering high-value customer discounts to return in-store.

Not only does this approach reduce shipping and handling costs, but it also increases foot traffic in physical stores. Retailers can also seize this opportunity to enhance the customer experience, offering personalised shopping advice or immediate exchanges that better meet the customer’s needs and, in doing so, increasing the chances of additional sales during the return visit.

Shifting perceptions
In addition, the integration of digital returns platforms into the retailer’s website allows for a smoother, more user-friendly process. By offering options for exchanges or in-store returns upfront, retailers can cater to the most common reasons for returns, such as issues with fit, size or colour. This proactive approach not only addresses customer requirements more effectively but also shifts the perception of returns from a hassle to a valued service.

Ultimately, a seamless returns process leaves customers feeling valued and cared for, fostering brand affinity and trust. This positive sentiment then spills over into future purchasing decisions, with customers more likely to shop with a retailer again after a smooth returns experience. Approaching returns with an analytical, customer-focused mindset allows retailers to transform this problem area into a source of insight and improved performance. As returns volumes seem certain to keep increasing, getting this key process right will be crucial to remaining competitive in the long term.

Tim Robinson, CVP, Doddle – part of Blue Yonder

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