Your customers’ journey doesn’t end after a purchase. What happens after a purchase is made, is what differentiates one DTC eCommerce brand from another. For instance, do you have a seamless and automated Return and Customer Service Program in place to assist customers that want to return an item?  How is customer experience over a return process? And are you giving customers a sufficient range of options that encourage customer loyalty?

What most eCommerce brands miss in their customer retention efforts is that building a relationship with each customer is an investment in itself. One way to look at it is through incentivising your customers with free shipping or store credits. But the real deal happens when you create tailor-fit Customer Retention programs based on your rate of product returns and refunds, your purchase rates, AOV, and your conversion metrics.

On today’s episode, Kunle and Joe dig deep into analysing return metrics, industry benchmarks, and a roadmap to building a CX pipeline that reduces refunds and cuts down overheads whilst expanding your customer base.

Covered Topics:

On today’s interview Kunle and Joe discuss,

• Return Metrics to Measure
• Metrics and Benchmarks to Compare your DTC Business from
• Strategies for Customer Retention Program
• Predictions on Returns for the next 12 months

Podcast Show Notes:

• 03:48 – Get the easiest way to backup your Shopify or BigCommerce store and undo unwanted changes with Rewind.io… Mention you heard about them at 2x eCommerce Podcast and get a ONE MONTH FREE TRIAL
• 05:21 –  Easily Grow Your Business With A Powerful Marketing Automation Platform! Check out Klaviyo
• 07:10 – Introducing Joe Vancena from Loop Returns
• 08:05 – The Loop Returns Story
• 09:22 – Insights on Customer Returns
  • Returns don’t mean you’ve lost the customer completely.
  • Common reasons for returns are: damaged product, wrong product received, wrong size.
  • Find alternatives to a refund.
  • Provide a comment slip where customers can write why they’re returning the item.
• 11:58 – Return Metrics of Successful Brands
  • Return Rate – Why are products coming back?
    • Check your return rate quarterly.
    • Aggregate all return reasons data and distribute it across departments.
  • Customer Acquisition
    • Customer acquisition is closely related to return reasons (e.g. sizing problems) so when you fix the issues to bring down your return rate, you’re also increasing your customer acquisition.
• 14:44 – Organizing Your Return Reasons
  Pre-populate your return reasons.
  Leave it open to comments to check for variables.
  Categorize these reasons and organize them.
• 15:27 – Other Return Metrics
  • Break out your return rate into multiple metrics
  • Refund Rate – How many are just actually trying to walk away?
  • Not all returns are opting for refunds.
• 16:59 – Best in Class benchmarks from a return rate standpoint
  • Apparel and Footwear:
    • Return Rate: Below 20% at any time period
    • Refund Rate out of all your returns: 80% (Industry Average)
• 18:25 – Returning Purchase Rate
  • Look at your repurchase rate within 60 days.
• 19:20 – Tactics to Bring Down Your Return Rate
  • Incentives are a reinvestment on your customers.
    • Discounts
    • Store Credits
  • Building customer relationships is an investment.
• 25:10 – Identify your customer in an automated fashion
  • Email
  • Codes
  • Present return options for your customers (Exchange, Refund, Store Credit, etc.).
• 25:53 – Customer Service
  • Retention Program is expectation setting and it starts at the top.
  • Directly connect serious return tickets to Customer Service.
• 29:08 – Predictions on Returns for the next 12 months
  • “Wardrobing” Trend – products are returned simply after trying them on to take photos in exchange for social currency (likes, follows, etc.)
  • Innovating processes to the buyer’s journey to reduce returns and customer overhead costs (e.g. in the fashion jewelry market they’re shipping ring sizers to customers to ensure correct fit).
  • Home Trend will be big.
  • Retail Stores will struggle.
• 31:39 – 2 Main Causes of Lost Cost in the Returns Program
  • Refunds
  • Shipping fees
• 32:00 – Exceptions on Returns
  • Swimwear, Lingerie, Earrings
  • Check the terms on your Customer Policy.
  • You can either provide the ff:
    • A refund with a shipping fee
    • Free Shipping
    • Store Credits
• 35:01 – Strategies for Devising your Return Program
  • Pull in your conversion rate metrics.
  • Identify which shipping policy leads to more refunds.
    • A/B Split Test
    • What’s the impact on your conversions?
    • Higher AOV offsets the cost of shipping
  • Check your Return Cohort and your Purchase Rate
  • “If you’re only chasing acquisition, you have a revolving door on the backside that’s actually hurting you.”
• 39:50 – Join the 2xEcommerce Facebook Group

Topic Takeaways:

• The foundation of your data is in your return reasons so categorize them, and break down the data into multiple metrics.
• When your customers return an item, it’s mostly because they’re disappointed so what you should do is to delight them back through a seamless return process (automation) and incentives.
• Have a built-in process flow for your returns and enhance the customer experience with ease of use. Not all customers would opt for a refund so present them with return options such as store credit, free shipping, or special discount codes.
• Customer acquisition is closely related to return reasons (e.g. sizing problems) so when you fix the issues to bring down your return rate, you’re also increasing your customer acquisition.
• Identify which shipping policy leads to more refunds which you can do through an A/B Split Test.
• If you have a problem with overheads expenses particularly in shipping fees, a higher AOV will offset the cost of shipping.

Tweetable Quotes:

“It’s not what people buy, it’s what people keep.”

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