All retail is becoming digital retail. The same fast-advancing data analytics capabilities that help retailers constantly innovate to improve consumers’ online shopping experiences are rapidly becoming available in stores, too. Now retailers can leverage that data to address all aspects of the consumer experience, including the vexing issue of retail returns.
In an increasingly digitally enabled marketplace, consumers are savvy to the value that companies place on data about their preferences. Data has become currency — one that consumers are willing to trade on to get what they want. According to PwC, 63 percent of U.S. consumers are willing to share more information with a company that offers a great experience.
The High Cost of Returns
No matter how easy you make the returns process, a return represents a negative impression, hurting a retailer’s relationship with the customer. Consider these statistics:
- Even if people love a company or product, 59 percent will walk away after several bad experiences; 17 percent after just one bad experience. (PwC)
- Sixty-eight percent of consumers are more likely to shop a retailer that offers automated returns capability versus one that doesn’t. (BRP)
- Customers who had the best past experiences spend 140 percent more than those who had the poorest past experience. (HBR)
Returns also hurt the bottom line:
- As retailers, you typically accrue significant costs to receive and process returns from the store all the way back through the reverse logistics process.
- You typically recoup just 12 to 25 percent of an item’s original cost on a return, according to Reverse Logistics & Sustainability Council.
- Every return represents a lost sale.
You can’t afford to continually disappoint customers with products that turn out to be a poor fit for their needs. Fortunately, the data analytics revolution means store associates can now have access to the data they need to reduce the incidence of returns.
Leveraging Data to Drive Down Return Rates
Consumers have all sorts of reasons to return products. Some of them, like habitual returners who enjoy buying and returning products, are out of your control. But many products are returned because the consumer is missing some information at the moment of truth: when they’re standing in front of a product making a purchase decision.
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Missing data may include product features, such as dimensions, insight into how to use the product, whether the product coordinates with a previous purchase (such as a blade for a particular blender) and even how that product will look in the consumer’s living space.
When customers shop online, they find answers to these types of questions with a click or two. Retailers have invested a lot of resources into responding to that click with targeted, relevant content: product specs, a video, “go with” options based on previous purchases, biggest seller recommendations, applicable promotions, alternative products that are in stock and so on. Some retailers even enable customers to upload photos, such as their living rooms for furniture shopping or of their own bodies for apparel, and overlay products on the image to help make their decision.
All these resources help drive customers along the sales funnel toward the best-fit product for their needs. The more relevant the information, the more likely the product will satisfy the customer and not be returned.
Associates at the Moment of Truth
When retailers can bring that same array of rich data and smart, dynamic decisions about content to the store floor, associates become as helpful as those “clicks.” Armed with a well-designed smartphone or tablet, an associate can deliver that same personalized, data-fueled experience of shopping online — and bringing additional value by making that encounter warm and human.
The combination of personal attention and deep access to rich, relevant product data makes it much more likely that that customer will leave the store with the product that truly meets their need. That means more satisfied, loyal customers, and fewer costly, relationship-damaging returns.
Consumers have stated explicitly that they are willing to share information to have a more fulfilling in-store experience. They’re also clear about their distaste for every aspect of returns. By equipping associates with the data and devices they need to guide the customer to the best products for their needs, retailers can use data just as the consumers would like them to: to drive satisfaction and prevent unwanted returns.
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