Product returns are a necessary and often expensive component of retail business. According to the National Retail Federation, roughly 20% of 2021 online sales in the U.S. were returned.
Thus the thrill of increased holiday sales is tempered by the likelihood of receiving a fifth of those items back.
But what if you could convert returns into sales? Every interaction with a customer or prospect is an opportunity to build long-lasting relationships. So, analyzing holiday gift return requests for their engagement and upsell potentials makes sense.
Determine the “Why”
First, take the time to understand the reason for the return. This crucial info informs two things:
- Controllable or uncontrollable? A controllable return stems from a merchant’s poor planning or execution, such as incorrect product descriptions, improper packaging, delayed deliveries, and shipping the wrong item. Uncontrollable returns are not preventable, such as when customers change their minds and decide they don’t want the product.
- Options. Should you offer partial money back? Would sending an accessory help seal the deal? Or should you promptly issue a full refund or credit?
Never let the returns process run entirely as self-serve. Online forms are helpful for initial communication. However, they’re impersonal and place the burden on the shopper. They also minimize the potential outcomes, which can leave money on the table.
If your returns process requires completing an online form, consider alternative communication methods, such as live chat.
2 Steps to Save the Sale
Reversing consumers’ decisions to return an item isn’t as difficult as it appears.
- Listen to concerns. Let folks explain in detail why they want to return the product(s). Sometimes it’s due to a misunderstanding, such as what a product does or how it works. Encourage the conversation to learn about their lifestyle and passions. This helps with recommendations.
- Exchange the item. Replacing sizes or colors is a no-brainer. But lifestyle concerns require other solutions. An alternate product could be related to the original gift or entirely different, depending on the person’s story. For example, a mom who received a cumbersome purse as a gift may prefer a crossbody satchel or a stylish backpack instead.
Some return transactions can increase revenue. If a product doesn’t make sense on its own, suggest accessories.
For example, a KitchenAid stand mixer has a specific purpose. However, attachments turn it into a juicer, pasta maker, ice cream producer, cheese grater, or meat grinder. By explaining everything the machine can do, a merchant can turn the “I already have a mixer” into an “Oh, really?” and close an additional sale.
Process a return request promptly if it’s the consumer’s clear preference. A Bizrate Insights study found nearly 80% of shoppers said they’d be less likely to recommend a retailer if receiving credit took too long, and 40% said they’d stop patronizing the business altogether.
The key is to preserve long-term revenue, not the immediate transaction. Consider letting the customer keep the product for free, which can sometimes save money.
No store is immune to returns. Instead of running the process on autopilot, use it as a marketing tool. Make it too cumbersome, and you risk angry consumers and poor reviews. But commonsense, personality-driven strategies will encourage folks to come again and tell others about it.