Black Friday and Cyber Monday have come and gone. The frenzy of price-cutting and promotions can mercifully, end. But now what? Tis the season of the holiday gift return. Just as much as consumers may be dreading boxing, labeling, and shipping their unwanted items, you may be cringing at the potential loss in revenue. Last year, Americans returned about $260.5 billion worth of merchandise (or 8% of all retail sales), according to the National Retail Federation. And this holiday season alone, nearly one-fourth of all e-commerce sales are expected to be returned.
As a way to soften the blow, you might be tempted to encourage customers to buy more during the return season, and you certainly can. But you don’t want to risk turning them off as you seek replacement revenue. Follow these best practices, and you’ll be rewarded with increased customer loyalty and sales growth.
1. Start with a Warm Up
Connect with your consumers’ emotions and alleviate their stress before you come on strong with a sales message. Consumer Reports published a survey that revealed that the two most aggravating return issues encountered by gift returners were getting store credit instead of cash, and inconveniently located stores. If your customers face these problems, find a way to soften the blow with easy-to-understand directions or simple credit redemption directions. Other common customer return issues include lost receipts and opened packages that might not be accepted by retailers. If your company doesn’t require receipts or unopened packages for returns, make that clear in a special message that alleviates any fears your customers might have.
After you’ve calmed your customer’s nerves, feel free to market to them. Just be sure to…
2.…Avoid the Awkward Upsell
People buy gifts for others during the holidays, so upselling during returns season becomes much trickier. Avoid blanket upsell messages like “buy a second one and get 50% off.” And be careful with algorithms that promote items that are often purchased together. These messages won’t work if the person you’re targeting was the gift giver. Instead, data mine each customer’s longer-term history and see if you can categorize their purchases. Any holiday season purchase that falls way outside a customer's normal activity might be best ignored. Alternatively, create a window between Thanksgiving and December 24, and treat those purchases differently with promotional messages that assume that customers didn’t buy those items for themselves. Don’t forget to glean information about people visiting your return policy page, and think about asking people who download a return receipt if they are returning a purchase for themselves, or if it was a gift.
3. Don’t Let a First Encounter End With a Return
People returning gifts may be encountering your brand for the first time. Don’t let their experience with you end on a low note. Try to capture the returner’s email address. Once a product has been returned, send a customer satisfaction survey with a discount for their next purchase. Outdoor outfitter, The North Face, is bold enough to encourage people returning items to sign up for their loyalty program right as they start the online return process.
4. Create a Great Return Policy, Within Reason
If you have direct competitors with a much better return policy, you could be risking brand loyalty with people returning holiday gifts. Comscore found that 66% of customers look at a return policy before making a purchase online. If a customer’s first experience with your brand is returning an item, it can affect their lifetime loyalty. Zappos famously gives you 365 days to return unused items, which is better than many other shoe retailers. Yet, many other retailers are even more lenient. LL Bean allows returns at any time, used or unused, no questions asked. Their direct competitor, REI did as well. The latter recently switched to a one-year return policy when social media chatter began advising consumers that they could get new replacements for all their old REI gear at no cost. LL Bean is sticking with their more lenient version.
The holiday gift return deluge is a fact of retail life. Retailers can only optimize the return experience so that it doesn’t disrupt the relationship they are building with existing customers, and use it as a positive early moment of truth in the engagement process with first-time customers.
This article was originally published on ClickZ on January 13, 2016.