After all, we frequently find a small percentage of customers are responsible for a majority of returns: For one of our clients, 8% of customers accounted for 70% of the retailer’s returns. A focus on profitability optimization means more targeted strategies, which can help retailers address the source of high return rates with less widespread risk to customer loyalty.
This approach hinges on a business’s marketing department, the team that is arguably closest to the data on your customers’ shopping habits, returns included. With the ability to track return events and segment customers by return rate, they can enact targeted strategies to mitigate impact, such as:
- Sharing free shipping promotions with your most loyal customers while suppressing similar campaigns and promotions for your frequent returners.
- Using AI prediction models to identify customers who are most likely to return based on past behavior signals, then excluding those segments from high-cost channels like paid media when building campaign scenarios.
- Triggering banners that highlight return policies when customers identified as frequent returners arrive on site.
In tandem with merchandising teams, marketers can take their efforts even further, narrowing their focus down to the products themselves. One possibility: Merchandisers can suggest higher-margin products for marketers to include in product recommendation grids in emails. This allows them to optimize for customer lifetime value, offsetting higher customer acquisition costs that free shipping incentives can create.
Marketers can share insights with merchandisers, too. They can monitor frequently returned products, for example, and identify potential opportunities for greater clarity in product descriptions—perhaps they don’t align with customer expectations, or more detailed information about fabric and fit is needed to help shoppers choose the correct size.
In that same vein, marketers can work with merchandisers to help decrease the likelihood of wardrobing—when consumers purchase products in multiple sizes and return the ones that don’t fit. A marketer could create a banner triggered when multiple sizes of the same style are added to cart, offering sizing recommendations or insights based on previous purchases. Engagement with that banner could be shared back with merchandising teams, again helping them understand where updates to product descriptions or sizing charts may help customers in the future.
Marketers and merchandisers don’t always see eye to eye. Despite working toward the success of the same business, they’re often tasked with different goals and success metrics, and that can understandably lead to divides between the teams. But the fight for profitability amid growing return rates is an unbeatable opportunity for collaboration. Bringing together customer knowledge from marketing and product expertise from merchandising can drive results that everyone benefits from, helping businesses see the real impact of these return strategies that live in the middle ground.