9 Levers to Lower Your Returns

Hey Team!

For most brands in our ecosystem, Q4 is significant both for recurring customers as well as acquiring new ones. With holidays and gift-giving in full swing, there's a whole lot of shopping.

However, I find that we put way too much focus on bringing those new customers in, yet hardly put any emphasis on making sure they love what they purchase and come back.

Brands generally see higher return rates and lower cohort retention rates in Q4. Why? Well, there are a few reasons.

Firstly, there's often a disconnect between the marketing promises made during the highly competitive holiday season and the actual customer experience.

We tend to overpromise and underdeliver, causing a mismatch between customer expectations and product reality.

This spikes return rates and diminishes trust, leading to lower retention rates that can carry into the new year.

Secondly, to capitalize on the holiday buzz, brands often expand their marketing reach, targeting a broader audience.

While this brings in more customers, they might not necessarily be your "ideal" customers. These individuals might be more inclined to return products or not engage with the brand post-purchase, impacting your retention metrics.

So, let's make this Q4 different. Let's not just focus on customer acquisition but also emphasize customer satisfaction and retention.

A broader customer base isn't necessarily a better one unless they're satisfied, loyal customers.

In the last six months, we’ve gotten our return rate on our hero product down close to 50% at JRB, and making it a focus was definitely worth it.

Let me share some of the playbook.

Before we get into it, a massive shout-out to Insense for sponsoring this week’s newsie.

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💡 Setting Expectations From Day One:

I'm not talking about your website. I'm talking about the very first point of contact. Those shiny ads that promise the world? They're your front door.

If your growth team is overpromising something that the product can't deliver, you’re setting yourself up for a return before the product even ships.

Aligning your marketing messages with actual product capability is paramount. Set expectations you can meet across products, shipping timelines, etc.

Instead of your typical shipping promise, you probably want to re-set expectations with the holiday delays.

📚 In-depth Product Descriptions and FAQs:

Ok, so you’ve set expectations; you’re all good, right?

We often fail to realize that when someone doesn’t have their product questions answered, they generally return it instead of bothering to even reach out to CX.

By providing comprehensive product descriptions, including dimensions, materials, and use cases, we can further bridge the gap between customer expectations and reality.

FAQs, particularly those curated based on actual customer questions, can also preemptively address potential areas of confusion, further reducing the likelihood of returns.

Pro Tip: Consider leveraging user-generated content. Let your customers share their experiences, photos, and videos of the product in use.

This not only adds a layer of authenticity, but also gives potential buyers a clearer understanding of what they're getting.

🔊 Repetition is the Name of the Game:

Repetition is the key to retention. And in our world, it’s the key to reducing returns. It generally takes a customer seeing something multiple times to truly “get it.”

Even if you have a stellar 60% open rate, let's not forget the other 40%. How do we reach them?

SMS, direct mail, and unboxing experiences are all additional touchpoints where we can reiterate key product information and education.

By ensuring our message is consistent across the customer journey, we can give them all they need to make the most of their purchase.

📹 Video Demonstrations:

There's a reason why platforms like YouTube are flooded with unboxing and product demonstration videos – people love a good unboxing moment.

By incorporating these into your product pages or blogs, customers get a real-time view of the product, how it works, and what to expect. It's a dynamic way to engage and inform.

Pro Tip: If budget allows, consider creating a series of video content – from unboxings to how-tos and maintenance guides.

The more informed a customer is, the less likely they are to return a product due to unexpected surprises.

🎓 Educational Content Beyond the Product:

Engage customers with content that's not just about the product but its context. For example, educate them about sustainability if you're selling eco-friendly products.

This enriches their understanding and deepens their connection to the product, making them less likely to return it and make a larger effort to figure out how to use it correctly.

Bonus: It might even turn them into a brand advocate.

I love how Patagonia puts this front and center of their homepage.

Pro Tip: Collaborate with influencers or experts in the field to create webinars, blog posts, or podcasts. A third-party perspective can add credibility and depth.

📈 Data-Driven Decision Making:

One of the biggest mistakes I see is brands thinking they don’t need to analyze returns, especially once they become a substantial number.

By understanding the basics, you can make a tremendous impact on lowering those return rates.

Dive into the reasons behind returns. Is there a particular product that's returned more frequently? Are there recurring issues in feedback? By leveraging data analytics, you can identify patterns and make necessary adjustments.

Lots of folks I know use Loop to process returns, but most use the “out of the box” return reasons like “I did not like it,” etc.

The problem is that you might be missing a real actionable one like “it makes me bloated” for a can of OLIPOP or “it makes my skin feel dry” for skincare.

Start with talking to your customers who are interested in processing a return and reach out directly to you about it.

Also, set a return reason as “other” and leave a mandatory text box to be filled out.

That way, you will learn what your actual top return reasons are so that you can deploy a fix and watch the rates drop.

In both of these examples, with OLIPOP or skincare, education can be a massive lever to fix this.

With OLIPOP, it might be “start with one can a day” until your body adjusts to the fiber content. That messaging alone dramatically shifted our returns.

🔄 Easy Exchange Options:

Sometimes, by avoiding easy exchanges, you quickly push yourself to return.

Offer seamless exchange options if a size doesn't fit or a color doesn't match. This not only retains the sale but also builds trust with the customer.

Pro Tip: Integrate a system where customers can check the availability of the desired exchange item in real time. This transparency can further reduce the return rate.

I’ve loved the Loop ShopNow feature for this exact reason. (We actually drive more upsell revenue monthly than our total Loop bill, which is wild.)

🌟 The Power of Brand Recognition and Its Ripple Effect:

I’d be remiss not to mention the value of a brand's recognition in the market, even when it comes to returns.

For example, as a brand becomes more known, like Hexclad, there's a psychological shift in consumer behavior. This isn't merely about the product's tangible features but the intangible value the brand represents.

The Halo Effect:

This is a cognitive bias where our impression of something in one domain influences our impression of it in another.

In the case of brands, positive experiences or perceptions of a brand can influence consumers to believe other positive things about the brand, even if they haven't experienced it firsthand.

So, if many perceive Hexclad as high quality, new customers will be predisposed to believe and expect the same, even before purchasing.

Social Proof:

This concept is rooted in the idea that people feel more comfortable making decisions based on what others are doing.

If many people are raving about Hexclad, new customers will feel more confident in their decision to purchase from the brand. It's the classic "everyone else is doing it, so it must be good" mentality.

Trust in Established Brands:

As a brand grows and garners more recognition, it inherently builds trust. People tend to believe that a well-known brand must have earned its reputation through quality and reliability.

With all these psychological factors at play, as your brand recognition increases, if you maintain product quality and accurate targeting, your return rates are likely to decrease.

Customers come in with a pre-established positive bias. They are not just buying a product; they're buying into a brand they've heard of, trust, and want to be associated with.

💌 Your CX Team is Your Best Ally:

Having your CX team follow up with customers can be transformative. A simple plain-text email asking how they're enjoying the product or if they have any questions goes a long way.

It's not just about reducing returns; it's about building relationships. And when customers feel seen and heard, they're more likely to engage, ask questions, and, yes, keep the product.

At the end of the day, a well-informed customer is a happy customer.

Product education and great CX are not just about reducing returns, though that's a significant benefit.

It's about empowering our customers, making them feel confident in their purchase, and ensuring they derive maximum value from it.

If we can achieve that, then we've not just made a sale; we've gained an advocate.

That’s it for this week!

Any topics you'd like to see me cover in the future?

Just shoot me a DM or an email!


Eli 💛