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The Retail Paradox: Building Customer Loyalty Through Better Returns

The Retail Paradox: Building Customer Loyalty Through Better Returns

by Luke Starbuck, VP of Marketing, Linc

Reverse Logistics Magazine, Edition 87

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Returns are a top priority for today’s retailers and can potentially lead to revenue loss if not executed well. With the continued growth of online shopping and free shipping minimums, it is now common for shoppers to buy multiple sizes of a certain item plus many different styles and return most for their own convenience and to meet the free shipping requirements. When consumers are ready to return the items they no longer need, they expect an easy, seamless return process.

Big-box retailers such as Walmart and Amazon are taking note of consumers’ expectations and have engaged in a head-to-head returns race to out-do one another in their return offerings for customers. For example, recently, Walmart announced the Mobile Express Returns initiative, touting a 30-second returns process through their mobile app for items purchased online and returned in-store. Amazon on the other hand, is implementing Amazon Lockers at select Whole Food locations and partnered with Kohl’s this past summer to allow consumers to return certain items at the department store.

The bottom line is consumers now expect easy returns, whether they are using their voice-assistant to begin the returns process, dropping the item off at a convenient location or using their laptop to begin the return journey.

Consumers’ expectations of easy and fast returns complicate the returns process for retailers, who do not have the capability or infrastructure to match Amazon. However, if executed well with an AI-powered service, returns offer an opportunity for retailers to build customer loyalty rather than create another point of friction for the consumer.

The Purchaser vs. The Customer
Before we dive into the full scope of an enhanced returns process, let’s consider the two types of shoppers and what they mean for retailers: the purchaser and the customer. For a retailer, a purchaser is someone who buys a product once and never returns; purchasers create a cost to the business and loss of revenue.

A customer, on the other hand, is someone who comes back and makes purchases time and time again. Customers are considered the lifeblood of a retailer’s business and are key to growth. In fact, according to a recent RJMetrics study, “companies that have mastered repeat purchases are getting up to 75% of their revenue from repeat customers.” At the end of the day, brands and retailers need to retain their customers to thrive, and a frictionless returns process is a key to this.

The Current Landscape
The Amazon era has increased shipping expectations from consumers and they are likely to look elsewhere if two-day shipping or free shipping is not available. For example, according to Deloitte’s 2017 Holiday Survey “free shipping topped the list of perks shoppers planned to take advantage of in this year’s holiday season (72 percent), in addition to store policies for easy returns (44 percent).”

The growth in consumer returns, combined with a proliferation of digital touch points and channels, creates potential havoc for retailers as they work to deliver real-time inventory accuracy across all of their channels and create a seamless process to identify what is being returned. Add the rise of voice-enabled shopping, and retailers need a path to not only enable seamless returns, but on-demand customer service capabilities that serve the customer 24/7.

Building Customer Loyalty With Better Returns
When Marc Lore became the CEO of in September 2016, the first step he took was to have the retailer’s customer care team report to him, a fact he shared openly in his keynote at 2017. Lore’s decision offers striking evidence of the way even the largest retailers value their customers. As we have noted, customers are the key to continuous growth in retail; creating a customer-centric organization to serve customers exceptionally well is the path to customer retention and profitability.

Customer-centricity is at the heart of the best retailers’ success stories, and it is technology that is bringing the vision into reality and delivering the experience customers expect, including transparency in delivery, fast exchanges and simple returns. Legacy CRM and marketing methods no longer do the trick, either. Today’s customers expect contextual service, without explanation and in a speedy and efficient manner. The solution for retailers and brands is automated customer care.

Customer care automation uses specialized AI to deliver truly personal customer service in real-time. With customer care automation, retailers can build customer loyalty by giving shoppers exactly the information they need and want through WISMO inquiries, tracking notifications, returns, exchanges, upsell suggestions and re-ordering. Additionally, through customer care automation, retailers can answer any questions customers may have or route them to a human customer service representative for additional and speedy attention.

The Automated Customer Care Opportunity: Returns and Exchanges
Just because a customer returns a product, doesn’t mean that the customer experience journey is over for that individual shopper. With a customer-centric view of the customer’s journey being a continual cycle, returns are a vital part of ensuring that customers come back to purchase from that particular brand or retailer time and time again. Artificial Intelligence can give new life to the returns process and inevitably build customer loyalty by allowing returns to be an area of customer engagement and a touch point that increases customer satisfaction.

Let’s say a particular customer works late into the evening and needs to return an item at 11pm. With an automated customer care strategy, retailers can give the customer the option of engaging with their voice assistant or Messenger chatbot to quickly complete the returns process based on the customer’s order history, coordinate the logistics behind it and finally create and print a shipping label. What’s more, the customer has just a few simple steps using their voice or smartphone to make it all happen, with none of the frustration that comes from filling out online forms, emailing customer support, or driving to the store.

In addition, an AI-enabled customer care environment can give consumers the option of engaging with the retailer or brand through the channels they prefer to use and can leverage new conversational channels to serve customers, such as Facebook Messenger. According to UPS’ Pulse of the Online Shopper 2017 study, “42% of consumers surveyed prefer self-service options when shopping online,” and “find the use of chatbots most appealing for getting product information and completing the steps for processing orders and returns.”

During the returns process, retailers can also utilize their automated customer care capabilities to engage with their consumers and offer options for possible product exchanges, as well as suggest additional products that better suit the customers’ preferences, based on their order history. By guiding the customer with exchange options, retailers can convert lost returns revenue to sales and offset direct returns costs. Finally, an automated customer care strategy allows retailers to instantly capture return details and reasons, which significantly improves visibility through the process.

Consumers do not want to jump through hoops to get an item returned, and retailers and brands need more shoppers to come back and buy again. Truly profitable, engaged customers come back to a brand or retailer time and time again because they love the products and the overall customer experience, and this is especially true for the critical moment of a customer returning or exchanging an item – one experience can make or break it for the customer’s satisfaction with a brand, and it is easy to lose a customer if the process is cumbersome and time consuming. By implementing an AI-enabled automated customer care platform and giving customers real-time service, retailers can not only provide a seamless returns process but also turn the returns experience into a strategy for growing their base of profitable, long-term customers.
Luke Starbuck, VP of Marketing. Luke built his first ecommerce website in 1997 and has more recently focused on bringing software that improves customer experience and drives revenue to ecommerce retailers for the past 5 years. He has led product, development and customer service teams and brings his experience in print advertising and media to digital and offline marketing and growth. At Linc, his primary goal is to connect retailers with the knowledge and tools that drive stronger customer relationships and transform one time purchasers into lifetime shoppers.
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