Customer loyalty in retail powered by transparency in returns

How Returns Grow Customer Loyalty

Cultivating brand loyalty is the single most important driver for your success as a retailer—here’s why:

  • A 5% increase in customer retention can increase profits by 25% to 95%. 
  • Your probability of selling to a return customer is 40% greater than that of selling to a new customer.
  • Repeat customers spend 31% more per transaction than new customers, on average. 
  • Keeping an existing customer loyal is 5X cheaper than acquiring a new one. 

In other words, customer loyalty has an outsized impact on your bottom line by any metric you want to examine. That’s why this blog will explore two of the biggest improvements you can make to improve the loyalty of your customers.

Invest in transparency for your customers

As a retailer, you should notify customers when confirming an order, shipping an order, and delivering an order—and you should do it in whatever channel the customer prefers (email, SMS, etc.). 

Moreover, you should notify customers anytime there’s going to be a delivery delay, especially if there’s any indication the order might be time-sensitive (gift purchase, seasonal product, etc.). 

People want to know what’s going on with the order that they’ve paid for (or the refund they’re expecting) so they’re highly motivated to pay attention to the notifications you provide (package tracking emails alone carry an open rate of approximately 70%). 

Branded tracking pages are an excellent way to promote transparency as they are, effectively, an information hub for your customer. Not only do these pages highlight the individual items included in an order and the location of said package(s), but they also provide you with a much needed opportunity to continue marketing to customers using special offers and “also boughts.”

Remember that the post-purchase experience hinges on expectation-setting and trust. Most customers don’t mind waiting for an order—as long you keep them in the loop. The more proactive your brand is with post-purchase communication, (particularly as it pertains to negative outcomes such as delays), the more trusting consumers will be—and trust leads to the repeat purchases all retailers crave.  

Do better with returns 

People buy with the intention of making returns, which is why nearly 60% of shoppers admit to  making purchasing decisions based on a retailer’s return policies. It also explains why 96% of customers will buy again from a business that offers an “easy” or “very easy” return policy. 

Therefore, your returns policy and experience are, in many ways, an acquisition play. Your approach to returns can not only help you convert that first sale, but it can cultivate trust and peace of mind with your consumer, which leads to more sales down the road. 

So, start improving your returns process by making sure your policy is easy to find. In fact, put the core details of your return policy (return windows, final sale rules, etc.) right on the product page so there’s no way shoppers can miss them. 

When crafting your return policy, put yourself in the customer’s shoes—what would you value if you were a shopper? Then offer multiple paths to the resolution you know you’d want as a shopper. 

The smoothest return is one that allows the customer to decide when, where, and how they complete their returns. That can include:

Offering multiple options from this list empowers the customer, increasing their brand loyalty.

Also, consider offering enhanced returns experiences for your best customers, something many marquee retailers are doing: 

  • Best Buy’s TotalTech program offers members a 60-day return period (4x longer than the return window for non-members).
  • Target RedCard holders get an extra 30 days to return purchases.
  • DSW’s Gold and VIP Elite members receive free online returns.

Finally, don’t be afraid to charge for returns. 

Estimates suggest that the average cost of a return totals as much as 30% of the original purchase price. Yet almost half of retailers offer free returns out of a fear of “losing out on business.”

The truth is, free returns may not be as important to locking in sales as you think. The modern shopper is accustomed to paying for convenience. Customers frequently pay $5 or more to have an item delivered to their door, so you shouldn’t be shy about asking customers to foot the bill if your return experience is truly seamless and convenient. 

Looking for more?

Watch this webinar featuring Narvar, Klaviyo, and Studio McGee about maximizing customer lifetime value through the post-purchase experience.

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