The ONE Massive Retention Lever You are Missing
If you did this one thing, I guarantee you will improve retention dramatically
Hi Team!
I bought a pair of pants last month from a brand I actually like. Ordered a medium, which is what I always get. The size chart said “runs true to size,” so I didn’t think twice about it.
They arrived huge. Comically huge. I could fit another person in there with me.
Fine. Mistakes happen. I figured I would exchange them for a small.
Except they don’t offer exchanges. Only returns.
Okay, so I’ll return them and order a small one right away?
Except they don’t do refunds. Only store credit. And I have to wait weeks for them to receive the return and process it before I can use that credit. And when the credit finally appears, assuming it is still in stock, I will need to add an extra $10 due to the restocking fee charged on my return.
So let me get this straight. I bought from you once. I liked the product enough to want the right size. And instead of making the swap easy, you want me to wait weeks, pay a fee, and jump through hoops just to give you more money.
I didn’t reorder. I just moved on. And it reminded me how much retention gets decided in these small moments, which is the focus of this week’s newsletter.
Let’s jump in.
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THE EASIEST CUSTOMER TO KEEP
In my pants story, I had done all the hard things. I found a pair I liked, so I made the purchase. The heavy lift was done.
Then the product didn’t fit. This is not rare. Sizing varies, body types vary, and sometimes the size chart is simply wrong. This should have been an easy moment to fix. Make it easy for me to get the right size, and I leave with a positive story about how easy the exchange was.
Instead, every step made me less interested in staying with them. No exchanges, only store credit, wait weeks, and pay a restocking fee. It was friction layered on friction.
And the frustrating part is that they probably think this setup is clever. They keep my money as credit, charge a fee to cover their costs, and avoid the operational complexity of exchanges.
In reality, they saved a few dollars and lost a customer. These are the silly short-term games that cost LTV that very few people are tracking.
RETURNS SHOULD BE A RETENTION PLAY
Most brands think about returns as something to control. The return rate goes up, margins tighten, and the instinct is to clamp down. Make returns harder. Add fees. Slow things down. Limit refunds to credit. From a spreadsheet perspective, it appears to be progress. Fewer returns equal lower costs.
What the spreadsheet doesn’t show is how many people quietly leave.
The customer who wanted to switch from a medium to a small but found the process too annoying is gone.
The customer who paid the return shipping and restocking fee for a damaged product is no longer with us.
The shopper who waited three weeks for store credit and forgot why they wanted anything in the first place is gone.
You lowered the return rate. You also lowered your repeat purchase rate, and that part takes months to show up.
Acquiring a customer is expensive. CAC keeps climbing. You invest in ads, creators, content, and everything else that gets someone to trust you enough to buy for the first time. That is the hard part.
THE BRANDS THAT GET IT
A few weeks ago, I ordered a sweater set for my wife from Tommy John. I showed her the order confirmation. She told me she doesn’t need more sweaters.
Fine. I’ll return it.
I accessed their returns portal before the package even arrived and initiated the process. Already smoother than most. Then it got interesting.
They offered instant store credit through Loop if I chose credit over a refund. And if I used it right away, they added a 10% bonus.
They still collected a credit card in case I never sent the original back, which is fair. But the whole experience felt simple and respectful. I didn’t return the sweaters. I exchanged them for something my wife actually wanted, spent a little more (!), and walked away impressed.
Now compare that to the pants brand that made me wait weeks and pay a fee just to get store credit I never used.
These two experiences exist in the same ecommerce economy. One brand treats returns as an opportunity to retain me and potentially increase the order value. The other treats return as a problem to protect themselves from.
WHY BRANDS KEEP GETTING THIS WRONG
The core issue is that many founders and operators have never experienced their own return flow as customers.
They look at return rates and costs. They see the hit to margins. They see shipping, restocking, labor, and the operational pain. And from that perspective, the “logical” solution is to make returns harder.
So policies get layered on. Restocking fees. Customer-paid return shipping. Store credit only. Slow processing times. Requirements for original packaging. All of it makes sense in a vacuum. None of it makes sense if you care about keeping customers.
The customer who wanted a different size is a warm lead. They already decided they like your product. They’re one simple interaction away from being a repeat buyer. You already spent CAC to get them. And now you’re going to lose them because you won’t send the new size until the old one stops traveling through the postal system.
The economics are upside down. Saving a small amount on return costs while sacrificing long-term retention is not a real win.
WHAT GOOD RETURNS LOOK LIKE
If you want returns to support retention, the playbook is straightforward.
Free returns for normal issues or first-timers. If someone has to pay a hefty fee to return something that didn’t fit or arrived damaged, the frustration begins before the process even starts.
Instant exchanges. If the customer bought the wrong size, send the right one and trust that most people will return the original one. Hold a card to charge them if they do not.
Refunds to the original payment method as an option. Credit can be encouraged with bonuses or incentives, but forcing credit can break trust.
No restocking fees for first-time returners on unopened items. If you need to price products slightly higher to account for returns, do that. Charging annoyed customers more money at the end of a bad experience is not the place to solve your margin problems.
Fast processing times. Days, not weeks. The sooner the loop closes, the more likely the customer is to stay connected to your brand.
Yes, handling returns well costs money. It also drives significantly stronger repeat purchase rates. The brands that understand this will win over time.
YOU ALREADY WON THEM ONCE
Again, the hardest part of running an ecommerce business is getting someone to buy for the first time. You have to earn their attention, build trust, and convince them to take a chance on you. That is where all the effort and spend live.
Once they buy, they’re in your world. They have an account. They signed up for emails. They stored their card. The initial friction is gone.
If something goes wrong, that moment becomes a test of what your brand stands for. If your process tells them to wait three weeks, pay a fee, and accept store credit, you’re telling them everything they need to know.
If your process fixes the issue quickly and simply, you’re building a relationship that lasts.
If you work at a brand, try your own return process this week. Go through it like a customer. Count the steps. Feel the friction. Notice where you, personally, would lose patience. Then ask yourself if this is the moment you want customers to remember.
If the answer is no, you know where to start.
Returns are a retention lever. Treat them like one.
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!
P.S. If you want to figure out how to get your brand to rank high in LLMs and show up in ChatGPT, Gemini, and more… check this out.
