Creating individualized return policies with user segments
Vaishali Ravi
·August 23, 2024
For ecommerce brands, building the right returns policy can be a catch-22. You want to build a policy that’s flexible and generous enough to keep your customers engaged—but not so flexible and generous that it encourages shoppers to abuse your policy.
The key to getting it right? Create customized return policies that segment your shoppers on an individualized level. By doing so, you’ll be able to deliver a superior returns experience for your dedicated customers—while stopping returns abuse and fraud in its tracks.
Here are some guidelines for building and managing individualized return policies.
Use returns management technology to set and manage policies
Before implementing personalized return policies, it’s crucial to have the right returns management technology in place. It would be inefficient and unsustainable to manually create and manage personalized policies at scale.
Instead, make the shift from manual returns to an automated returns management solution like Loop, which can help you build personalized policies and put them on autopilot, with no need for hands-on customer support.
Loop provides merchants with infinitely customizable workflows, which you can use to set conditions around returns, including the returned item’s SKU or category; the reason for the return; and the customer’s purchase and return history.
By personalizing return policies down to a customer level, you’ll be able to reward your most loyal customers while disincentivizing shoppers who might otherwise abuse your policies.
Reward your VIP and loyal customers
Maintaining a high customer retention rate is a crucial part of building a sustainable brand—so it’s important to find ways to reward your most engaged shoppers.
One strategy to consider is setting up a VIP rewards membership program. By encouraging customers to opt in to your program—whether free or paid—you’ll be able to track their shopping history and encourage them to earn rewards points that they can apply towards future gifts or perks, including preferred return policies.
If your standard return policy offers a 30-day return window with $6.99 shipping, you might offer a more generous policy for your VIP members: For instance, the shoe brand DSW offers free return shipping and a 90-day window for VIP Gold members, and a full year for VIP Gold Elite customers, compared to $8.50 return shipping and a 90-day return window for standard customers.
Offering a great loyalty program that rewards customers for repeat visits will keep customers engaged, and encourage them to spend more with your brand. In fact, 95% of brands say that loyalty program members spend more than other shoppers, with 60% claiming they spend two to three times more than non-loyalty program members. By prioritizing a best-in-class returns experience for these customers, you’ll be able to lower your spending on customer acquisition and boost your customer lifetime value among your loyal shoppers.
Protect your brand from fraud and return abuse
Return fraud and abuse is shockingly common: Close to 14% of returns are fraudulent, and nearly 40% of respondents to Loop’s Consumer Fraud Report said that they or someone they know personally had participated in returns fraud or abuse within the past year.
How can ecommerce brands take a stand against return and abuse, without punishing their loyal shoppers with a sub-par returns experience? Building and managing personalized policies is the key.
When it comes to protecting your brand against returns fraud and abuse, here are some ideas that can help.
Require inspection prior to refund on fraud-susceptible products
Using Loop’s Insights feature, you can analyze your returns data and identify the product types and categories that are most susceptible to returns fraud. With high-value electronics products, for instance, a scam artist might return a box of rocks weighing the same amount as the original product. If your brand processes the refund immediately upon receiving the item, the scam artist will be free to keep and resell the original item for a profit.
To prevent return fraud, you can require that high-value items must be inspected at your warehouse prior to issuing a refund for customers with a limited history with your brand. However, if the shopper is a longtime customer, you can process the refund immediately, helping to preserve loyal shoppers’ positive experience with your brand while mitigating against risk from potential scam artists.
Implement return fees for frequent policy abusers
In online shopping, it’s not uncommon for shoppers to use your store as a virtual dressing room—ordering a wide variety of products with every intention of sending most of them back. This type of returns abuse, commonly known as “bracketing,” can result in high expenses around reverse logistics, and in some cases, the merchandise can’t be resold, hitting your profit margins even harder.
In this case, consider charging return fees to customers who frequently send back merchandise, which will disincentivize them from bracketing future purchases. If the customers have previously returned products in used condition, counter to your return policy, you can block them from requesting a return at all, and inform them at their next purchase that all items are final sale.
Use Loop’s Offset to protect your bottom line
More brands are issuing return shipping fees as a general rule, which can help protect against returns abuse and fraud while protecting your profit margin.
That said, you can deliver a better customer experience by offering intelligent return fees as a form of purchase protection. Using Loop’s new Offset feature, you can ask customers at the point of purchase whether they’d like to pay a small fee (eg. $2) for free return shipping if needed, rather than pay a higher amount later if they decide to make a return. By using Offset, customers can benefit from a superior and more affordable return experience, while helping your brand cover the costs of reverse logistics.
By automating your returns management with Loop, your brand will have the tools to set and manage an infinite variety of personalized return policies, using conditional logic to determine the process and outcome for any return request. You’ll be able to reward your best customers with generous return policies, while protecting your brand against fraud and abuse.
Ready to see how Loop can help you build the right return policy for any customer?
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