Acquiring new customers is hard – after months of work setting up Marketing campaigns, optimizing websites, re-targeting, and personalizing, it can be painful to see a customer initiate a return. But a return doesn’t have to mean a lost sale or an unhappy customer.
Returns are a common part of the post-purchase experience, which is an increasingly crucial element of the customer journey. From the point of a customer return, to packaging and speed of shipment, even to what an order tracking page looks like – it’s far too expensive to acquire a customer just to lose them during the post-purchase phase because the wrong t-shirt size went out or shipping took longer than expected.
UPS’ Pulse of the Online Shopper study found that 73% of shoppers – nearly three in four – say that the returns experience affects their likelihood to buy again from a particular retailer.
Now think about your own online shopping experience as a consumer. When you go to a website and the returns process looks expensive or painful, how likely are you to even buy in the first place? Marketers and brands should be surprising and delighting customers at every stage of their journey, ensuring a beautiful, branded, and fast experience end to end – one that must include post-purchase.
You should be allocating part of your Marketing budget to this important cohort, which will ultimately help you build customer loyalty and ROI.
The Budget Battle: Customer Acquisition vs. Retention
Marketing dollars are traditionally spent on customer acquisition, with budgets across the board for Digital Advertising, Brand Ambassadors/Influencer Marketing, Social Media, Email Marketing, and more. Marketers can become so focused on getting someone to purchase for the first time, that they often forget that it costs more to acquire a new customer than it does to retain and grow the lifetime value of a current customer.
Of course, businesses need new customers to grow, and it would be a huge mistake for anyone to stop spending on customer acquisition. At the same time, if all your focus is on new customers, you’re failing your business on two notable fronts:
The first is brand loyalty; we’re at a time in the industry where retailers are putting barbershops and cafes in their stores to enhance the experience of shopping with them. Brand identity and public sentiment are more important now than ever before.
The second is customer LTV; your best shoppers are the ones who purchase again after their first purchase. With returns increasing as fewer shoppers are going into physical retail locations, improving the post-purchase process is imperative.
So never forget about the importance of retention. For an average e-commerce brand, it takes five new shoppers to equal the revenue of one repeat shopper. By investing in customer retention at every point of the shopper journey, including post-purchase, you can build a community of loyal shoppers that purchase time and time again.
The ROI in Returns
A smooth post-purchase process also impacts customers’ shopping experience and influences the likelihood of future purchases. Pitney Bowes’ Online Shopping Study found that 86% of shoppers equated some aspects of a poor post-purchase experience (like receiving the wrong item, a damaged item or taking too long to get a refund after returning an item) with having a root canal!
What’s more, nearly nine out of ten consumers said: “they will make a complaint or take action that could hurt a brand’s reputation and bottom line following a bad post-purchase experience.” And among them – nearly a third say this bad experience will cause them to never shop with the brand again.
This is why it is so important to take care of customers and proactively resolve – even over-delivering – on any issues during the post-purchase journey. It will help your brand stand out from the rest. Word of mouth is something marketers can’t pay for, and the more you’re able to make things right by the customer and be transparent and generous with things like return policies, the more likely customers will be to speak highly of your business and refer other shoppers.
Make Post-Purchase a Priority
Brands that can be flexible with generous return and shipping policies can benefit from a higher upfront conversion rate since these policies will ultimately impact whether people will try your product or not. Simple returns pages like those for Outdoor Voices and UNTUCKit are great examples of how companies can be transparent about returns. Both of these companies take their dedication to customers (and the post-purchase process) even further by using financial technology to provide instant credit for an immediate exchange at the point of return – meaning customers are getting the right item even before returning the wrong one.
In addition, marketers should think about how they can recreate an in-person experience online. This can range from prominently showcasing an easy returns policy (versus having customers scroll through lengthy ones) and surfacing great customer ratings about their returns experience. To keep shoppers happy and engaged, consider sending surveys to get feedback on how they liked a product and being proactive about resolutions if something didn’t arrive as planned.
If The Golden Rule is to treat others the way you want to be treated, then The Golden Rule of the post-purchase experience is to treat returning customers as well as, or even better, than someone you’re selling to for the first time. Above all, doing the right thing by the customer is the most important aspect of every stage of the customer journey.