Digital Marketing, Thought Leaders

5 Methods That Will Reduce Your Product Return Rates

May 26, 2020

by Jake Rheude

Director of Marketing, Red Stag Fulfillment

No matter how good your product is, an e-commerce sale will only stick if your customer enjoys it. You can protect revenue and minimize returns by helping customers create a lasting connection with products before they arrive.

Nearly half of online shoppers return products each year, which costs online merchants more than $350 billion annually. Avoiding that loss is tricky and requires a mix of customer trust and a great offer. Personalization is one unifying thread to help companies do both.

In fact, personalization is already a proven way to increase email open rates, influence people to spend more, reduce frustration, ignore competitor offers, and deliver many other benefits ahead of the sale.

Now, it’s time we look at using those same tactics as a way of improving the sale and avoiding costly returns.

5 Ways to Reduce Product Return Rates

  1. Build offers by knowing your audience
  2. Match people with products categories
  3. Adapt your offers to the consumer’s location
  4. Address what doesn’t work for customers
  5. Create campaigns based on behavior

1. Build Offers by Knowing Your Audience

Personalization starts with understanding your audience.

There are big-picture questions to answer:

  • Who are they?
  • What are their motivations?
  • Why are they choosing you over competitors?

And there are also small things to track about your audience:

  • How they navigate your site
  • Which channels they come from
  • What products are viewed in sequence as things are added to carts

Combining the answers from these two segments will help you understand what works with your customer and how to present your offer. The good news is that there’s plenty of marketing information out there to help you target specific people and personas.

For example, 68% of Canadian millennials say they’ve made a reactionary purchase because of FOMO (fear of missing out). Much of that fear is driven by social media — advertising and consumers’ friends. That might tell you to work with influencers or promote user-generated content on social channels. Then adding a countdown timer to your sales page to reinforce the FOMO feeling will reel it in.

Use that audience information not only to cater to your initial offer but also to guide recommendations on your website and in emails. Purchase-tracking can make it easier to profile customer groups and create like-audiences to target.

Personalized email campaigns deliver 6x higher transaction rates when they show customers interesting products and explain how they can enjoy them. Typically, you’ll have the perfect groups together once you create product categories.

If you truly know the ins and outs of your target audience, you’ll be able to create offers they can’t resist.

2. Match People With Product Categories

Product categories effectively target your consumer’s interests and activities.

January always comes with a flood of e-commerce and retail returns after the holiday season. Last year, projections predicted that online returns for January 2, 2020, alone would increase by 26% compared to 2019. Holiday shopping and its related returns provide good insight into understanding personalization.

At the end of the year, many people are purchasing products for loved ones. This also occurs throughout the year during other large holidays and individual special days, like birthdays and anniversaries. Finding gifts for others can be difficult. Make it easier by turning customer lessons into product categories.

Go beyond generic “gifts for him” lists and instead target interests and activities. Align product categories with how you’d explain a target persona to a fresh marketing intern. Categories can be broad but still understandable:

  • Bookworm
  • Outdoorsmen/women
  • Chic and vogue
  • Racing enthusiast
  • Sloths
  • Medieval and magic
  • Tech junkie

You can increase personalization efforts by helping people find the right group, whether it’s for themselves or someone else.

A great example of this is Glasses Direct. It has a great “Style Finder” that asks shoppers five questions and then provides style recommendations.

GlassesDirect Style Finder

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Each question is simple, and the options aren’t confusing. After you select your choices, the site delivers the recommendations on its normal sales page. Your answers are used as filters, which you can then turn off if wanted.

GlassesDiirect Men's Oval Glasses

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What’s even better is that Glasses Direct provides a targeted ad on the page, in this case giving us 24 hours to save 25%. It creates a resonating urgency based on choices and referral sources.

If you match your consumers with product categories, they’ll be drawn to the products that have been curated for them.

3. Adapt Your Offers to the Consumer’s Location

Matching offers to readily available geolocation data may help you give customers a more useful deal. Common segmentation data here includes language, currency, region, and city. You can combine these real-time stats with relevant cultural data for better approaches.

Customers’ locations impact every aspect of their life. It touches on how they dress, what they do indoors and outdoors, which friends they have, how much money they have to spend, and more. Companies can use personalization by using this information as well as local market data.

For example, let’s say you sell something to hold or heat up frozen snacks in the U.S. You can heavily market in urban areas with large populations for a good reach.

College towns are also likely to be a rich target. Personalize these efforts by promoting your food as a tailgate snack ahead of a big rivalry game for each college in your footprint.

If it looks like rain over the weekend in Dallas, for example, shift the language in coupon ads to promote staying in and watching a movie instead of getting caught in the rain.

Real-time and regional data are all readily available with modern platforms. Use them to personalize and tell customers exactly why it makes sense to use your product in their daily lives. It creates a personal connection between the customer and your brand, reducing the likelihood of a product return. In this case, location really is everything.

4. Address What Doesn’t Work for Customers

Customers complain, and those complaints will impact your returns. You won’t be able to stop complaints completely, but you can address issues directly by addressing what doesn’t work.

Have your team look at common review sites and search for your brand on social media to find these issues. Respond directly to the person, be empathetic, and try to solve their issue immediately.

Personalization is important to this approach, too. Every customer (and complaint) is different, so address their specific problem. Apologize if you got things wrong, and discuss how to fix things publicly, even if you have to move to private channels to finalize the fix.

It may be a complex issue on how to use your product, or it may be something as simple as choosing the right packaging to protect products in transit.

You want this customer to feel taken care of, limiting the chance they return a product. This personal approach also builds trust with customers who will read the review and see your response.

Publicly addressing issues can also save you from future returns.

Say Customer A has a complaint about the size of your jeans, and you resolve it by replacing them with one size larger. Customer B sees this exchange and purchases that same larger size jeans, satisfied with the fit.

Taking a little extra time to personally solve Customer A’s problem and make that resolution public prevents Customer B and many others from having to do the same returns dance.

If you continually analyze complaints and returns, you may also be able to change on-site marketing and chatbot scripts to reflect nuances when someone asks about something like a size chart or fit recommendation.

No matter how small or large it may seem, addressing the customer’s complaints or product faults will reduce returns in the grand scheme of things.

5. Create Campaigns Based on Behavior

Behavior-based campaigns are a great method to increase personalization.

Did you adjust your website based on customer habits during the winter holidays?

The year-end shopping blitz is usually when companies start thinking about site visitors who view products often but aren’t necessarily purchasing more. They’re just browsing, and that’s an important habit to note.

Personalize campaigns around the habits that users take on your site to encourage them to buy products that fit. Educate them on your products and why things may or may not work.

Efforts here include showing users items they recently looked at. Personalize the homepage based on these products as well as relevant information.

For instance, if people need to use a certain type of cloth for a cleaner you sell, put your explainer blog or FAQ in the “Recommended” section.

Adapt popups and other exit-behavior items to prioritize minimal investments for an initial interaction or sale. You see software doing this with freebies or educational items to get trial subscriptions going, which people are less likely to cancel if they use the service.

OptinMonster, an online lead generation software, does just that.

OptinMonster Ouch's That's Abandonment

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Here, the customer has the option to either go ahead and get started with OptinMonster or find some answers to their questions. Giving someone an option of how to respond makes the choices even more compelling. You’re letting them guide the experience, which will feel personal.

That’s just one of many behaviors you can target. This works for e-commerce companies as well as software brands because it encourages people to learn. The more they know about you and your products, the more likely they are to trust you and purchase something they believe they’ll use. More importantly, the more likely they are to purchase something they won’t return.

Be Helpful

Take the information that people willingly provide and show them the value of it. You can’t eliminate all returns but providing information and building a relationship will help you reduce them, especially if you’re giving customers something that is useful.

Sometimes, that means eliminating steps because you already have an idea of what they want. Or, it could mean making it easier to find options or information people need to finalize their purchase decision.

If you’re struggling with what that means or where to start, think about the last time you bought something online and then found an option that might’ve been even better. Something in the perfect size or color, or even an option that had an extra feature you would’ve enjoyed.

What could the company have asked or shown to you that you could’ve found that better fit? How could they have helped you?

That’s your goal with personalization. It can be tough, but it pays off big when you get it right.

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