Online retailers and their customers communicate constantly. When they email each other. When they ignore each other. When they exchange money. Words, silences, actions — it’s all communication.
All too often, that communication involves a power struggle. Maybe one party doesn’t want to talk at all, or both parties want to talk about different things? Whatever it is,
The retailer takes charge, and customers feel some combination of…
- Talked “at,” or peppered with irrelevant promotional messages, because the company wants to talk about company priorities and customers don’t
- Stalked by granular personalization they don’t feel they opted into, because neither party wants to talk — but the company wants the benefits of listening
- Silenced, with no viable avenues for sharing their feedback, because customers want to talk right when the retailer sees little upside in that
So customers try to take the power back and have the last word! They return what they bought, they unsubscribe. Mic drop.
This dynamic is costly in terms of CAC, revenue, and LTV, and luckily, there’s an alternative dynamic available: discourse.
Discourse means two parties sharing power and exchanging ideas in an open, flexible way. They both talk. They both listen. They don’t want to win or get the last word; they want to understand each other better.
Michel Foucault described discourse as a rare reprieve from the “force relations” of the commercial world, where people pressure and prod each other to buy and sell.
But engaging customers in real, ongoing discourse — soliciting their questions or feedback, and reacting promptly — used to sound unrealistic. Too much Socratic method, not enough growth hacking.
Times have changed. Online retailers need idealistic retention strategies. Post-purchase discourse at scale can help eCom shops optimize for the industry’s new North Star: net conversion rate.
Welcome to eCom’s Retention Age
Since Apple’s privacy update last year, high customer acquisition costs are the new status quo. A customer that used to cost $30 to acquire might cost $50 now, or more.
In this context, the grow-at-all-costs approach VCs imposed on eCom back in the 2010s feels outdated and impractical. Funding is scarce in today’s economic landscape, and the new golden ticket isn’t scale — it’s a path to profitability.
So, where do most conversations between customers and brands begin? In the midst of a product return. Returns are the Achilles’ heel undercutting many businesses’ profitability — 30% of the average eCom retailers’ sales end in returns, according to data from Loop.
Returns also undercut an upper-funnel eCom metric more important to org health than CAC or NPS: net conversion rate. This is your conversion rate, excluding conversions that ended in returns — and we should all be talking about it more.
Viewed in terms of net conversion rate, broad brush acquisition strategies look less effective, and ambitious retention strategies rooted in post-purchase discourse seem more worthwhile.
It’s not that returns can’t be completely prevented. Some pants just don’t fit, and your DTC hot sauce is always gonna be too hot for someone.
But in conversation, you can suggest dissatisfied customers try a different size, or a milder sauce, that might resolve their existing issue — while also offering the option to return. You can prove that your brand is bigger than one product, or raw profit motive.
Ultimately, you can convert unhappy customers to customers who feel heard — and you turn some returns into exchanges. In some cases, you may even get the upsell! Win/win/win.
Pulling off this kind of discourse at-scale felt impossible back when eCom companies could get endless new customers through Facebook Ads. Those days are gone, baby, gone.
Now, it needs to be possible — and it is.
A step-by-step guide to converting returns into a conversation (and saving the sale with an exchange)
An exchange is preferable to a return because…
- You keep the revenue
- You build trust
- You boost your net conversion rate.
It’s especially important in Q4. Returns are a constant of eCom, and they spike around Black Friday. On average, return rates rise 29% that weekend, according to data from Loop, and 37% of each year’s returns happen between November and January.
Prompting, facilitating, and encouraging discourse with your customers can minimize your returns, and pave the way for a profitable holiday season. Here’s how to do it.
Start the conversation:
Proactively check in with customers post-purchase
This is when customers are most likely to want to reach out to your brand and feel ignored. Open the channel. Show up for the discourse. Ask questions.
If you’re asking about their lives and giving them a way to respond, customers are less likely to feel ignored or talked “at.”
So: Was their purchase cool? Useful? How many stars out of 5?
- If they love it, ask for a review or testimonial, and encourage them to buy again with exclusives.
- If they ignore you, let them.
- If they don’t love it, ask them why. And don’t stop there!
Offer a resolution:
Walk unhappy customers through all their resolution options
Every customer knows about returns, but not every customer knows your policy on exchanges, and the special secret deals they might be eligible for.
So make sure to walk dissatisfied customers through their full decision tree. Build that education into the return flow.
- If they struggle to use your product, recommend educational content — like a video tutorial, a blog post on creative use cases, or (at least) an FAQs page
- If they still want something you offer, let them exchange what they bought for anything in your catalog — not just their initial purchase in a new size or color
- If they still want to return, let them. What matters is that it’s an informed decision, not the only option they know about.
Make it personal:
Treat each customer uniquely
Customize your return policies and incentives based on each customer’s purchasing behavior.
- For every customer, personalize your exchange recommendations as much as you can, based on the customer’s browsing data and any other intel you have.
- For first-time customers, you might offer a special credit if they switch a return to an exchange — essentially incentivizing them to give you a second chance. If they go through with the return, they’re less likely to buy again.
- For VIP customers, you might try an extended window for returns. It could be 90 days instead of the typical 30. A lifetime guarantee makes sense for some companies.
That last point might sound counterintuitive, but you’re not actually trying to minimize returns.
You’re trying to maximize the number of happy, loyal customers using your products and sending you referrals.
Simplify physical returns
Your return process is your last chance to impress your most unhappy customers. It’s your last word in those conversations. Go above and beyond to end on a positive note.
Remember, even automated flows are a form of communication. Communicate “We value your time, money, and happiness” with touches like…
- An option to keep the product instead of returning it — at least with select customers or products that can’t be restocked
- Pick-up-at-home options
- Box-free and label-free return options
- Free shipping on returns — the bare minimum in 2022
A high-friction return process says, “We want to keep your money even though we didn’t earn it.” An easy, generous return policy builds trust and encourages customers to try buying again.
The next-gen differentiator: discourse
Eradicating all returns is a fool’s errand. But in today’s economy, eCom needs to eradicate the return-as-mic-drop. The frustrated return that started as a fruitless Google search or an ignored Twitter mention, that could have been a conversation and an exchange.
That means keeping up a discourse with your customers post-purchase. Ask for feedback, react promptly and reliably, and build loyalty.
Communicate that you and your customers have a shared goal: for them to unlock value with your products. There’s no power struggle between you. You’re a team. You’re listening.
In a real way, exchanging ideas leads to more exchanges — and it will help your company stand out from the crowd.
In eCommerce, “growth” has for a long time meant “acquiring new customers,” and (implicitly) “deprioritizing unhappy existing customers.”
Many companies have been slow to react to the new climate, where meaningful growth means growing LTV, net conversion rate, and profit through retention. But the next generation of success stories will be the early adapters.
So ask curious questions. Personalize your responses. Keep the conversation going.
Start a conversation with our friends at Loop!
Loop can help get you on the path to improving your returns and exchanges process for your customers.
Read more from Future Commerce about our extremely-very-highly-principled-approach to relationship-building between brand and customer:
The Good Friction Opportunity — Original CX Research from Future Commerce
Visions Episode 2: The Discourse from Visions by Future Commerce
“The Secret Chord the Pleased the Lord” from The Senses
Rethinking Brand Power Structures by Brian Lange for Future Commerce Insiders
Returns don't have to be goodbyes 👋 That’s why 1800+ Shopify brands like Allbirds, Chubbies, and Brooklinen trust Loop as their returns partner.
Transform returns into returning customers by creating the best post-purchase experience possible. Reduce return rates, retain revenue, prevent abuse, and protect profits.