Advertisement
08/29/2022

Survey: Returns impact online customer retention

Dan Berthiaume
Senior Editor, Technology
Dan Berthiaume profile picture
Image
A good returns policy helps keep online customers coming back.

A positive post-purchase experience is crucial to both obtaining and retaining digital customers.

According to “Consumer Report: How Returns Impact Customer Retention,” a new survey of more than 1,000 U.S. online shoppers from Shopify returns platform Loop, customers pay close attention to a brand’s return policies. Close to six in 10 (57%) surveyed shoppers are willing to abandon a brand entirely when provided a poor post-purchase experience.

And close to nine in 10 (87%) respondents indicate that post-purchase incentives influence their likelihood of making a first-time purchase with a retailer. More than half (52%) value product discounts, while 41% value coupons for future purchases or in-store credit, and 34% value an unlimited returns window.

Other notable findings include:

  • Nearly half (45%) of respondents say a product price point of $50 or less would discourage them from making a return because the refunded amount isn’t worth their time and effort.
  • More than four in 10 (42%) respondents prefer to drop returned items off at a shipping partner like UPS or FedEx. Nearly one-quarter (24%) opt for at-home, product pick-up, and close to one in five (18%) respondents prefer to return products directly to a retailer’s storefront.
  • More than half of respondents (56%) care about the environmental impact of returns “somewhat” or “a lot” — and only 20% of surveyed consumers don’t consider them at all.
  • Over a third (35%) of respondents have opted out of returning a product due to the potential environmental impact.

“One bad return experience can result in complete consumer abandonment,” said Aaron Schwartz, president of Loop. “Today’s economic and market uncertainty means consumers are paying close attention to retailers’ return policies and if brands aren’t considering the customer journey beyond the point of purchase, they’re missing out on critical opportunities to build trust and boost customer retention.”

Click here for the full survey.

Returns cost online retailers order value

In addition to providing a satisfactory online returns experience, retailers may want to focus on minimizing product return rates. A recent survey of digital and omnichannel brands from Pitney Bowes found that online returns cost retailers an average 21% of order value, with several brands reporting ratios considerably higher.

According to the Pitney Bowes BOXpoll survey, 70% of surveyed retailers say they are actively trying to lower the cost of returns by addressing transportation and/or processing costs. But the goal is complicated by shared accountability for returns strategies.

While 42% of surveyed retailers give their logistics/operations leaders final authority on selecting a returns transportation vendor (with the remainder split between customer care, e-commerce, procurement, marketing, and IT functions), only 25% give operations leaders the same authority for selecting returns technology vendors. This division of responsibility is more likely to create gridlock when it comes to decision-making, according to the study.

This financial burden is compounded by the fact that e-commerce return rates are at historic highs —an average of 20.8% in 2021 versus 18.1% in 2020, according to the National Retail Federation.