While the digital age has managed to shake up the way retailers sell to customers, customers have also used this opportunity to reshape their own shopping experiences. In this sense, consumers have become self-assured.
This assurance can be seen through their feelings towards retailers. In a Signifyd survey, 84 percent of consumers said they had no sympathy for retailers who feel forced to accept returns with no questions asked.
Today, consumers aren’t shy to return products, even when they don’t follow return policies. There’s a strange attitude of, “Hey, you make the rules. We just figure out how to bend them.” To consumers, it’s just a part of good customer service.
However, returns, both legitimate and fraudulent, are one of ecommerce’s biggest money burners. U.S. retailers took a $309 billion hit because of returns in 2019, $41 billion of that coming from online sales, according to Appriss Retail. Roughly 8 percent of those returns are fraudulent, the National Retail Federation says.
To limit this passive attitude to returns, retailers must create positive experiences with their customers to forge a special bond. Here, we explore why returns are a problem for retailers, and what can be done to tackle the issue.
Does your policy encourage returns?
A return policy is important for building trust with a customer. But if a policy is too liberal, you may be opening your business to abuse. Adversely, a tight return policy can cost you in customer lifetime value. We need to find a balance. Signifyd’s Consumer Sentiment Survey found that in order to build a better relationship with customers, consumers must acknowledge the true cost of returns.
Shoppers want to return products for any reason. But companies should think carefully about how strict they are with their return policies. Don’t expect consumers to have sympathy at the return desk: 74.5 percent of consumers said they don’t feel guilty when returning a product.
Often, retailers will offer liberal return policies in order to stay competitive, accepting returns even if there’s nothing wrong with the product. But nearly 84 percent of consumers said they had never thought about the issue, or that they simply believed that it was just part of doing good business.
While 9.7 percent said the situation was unfortunate, they agreed that it should be expected. Only 6.6 percent believed that returns were unfair to retailers and expected things to change.
Having said this, 57.7 percent of consumers said they carefully check return policies before purchasing. Meanwhile, one-third of consumers assume they can return products for any given reason.
It’s clear that consumers do not understand the damage of returns for businesses. But a positive experience is essential to build good relationships with consumers. For 75 percent of people, a poor return experience would be a strong reason to stop shopping with a retailer. Meanwhile, 82.6 percent of consumers said that a good returns experience would encourage them to shop again with the brand.
We need to find a balance of strict but convenient returns. Make your policy crystal clear but ensure that customers are not discouraged from returning products for a good reason. Offer free returns and easy packaging that can be reused.
There’s trust in data
Dealing with a data breach is difficult. You may be left uncertain about your security and information. Consumers can also be unforgiving when it happens. Half of consumers assume their personal data has been stolen in a recent data breach. When fraudulent charges appear on their bank account, a negative feeling can be generated against merchants, even if they are not to blame.
Losing trust with a customer can lead to future abuse which can damage businesses. Though only 8.1 percent of consumers admit to filing a claim with a credit card company saying that an item was not delivered when it had been, everyone can appreciate that this can have a major impact on retailers.
Another 6 percent of survey respondents also admitted to keeping a product they were unsatisfied with, but still asking credit card companies to reverse the original charge for the product.
Of course, we can’t draw a straight line from data breaches and abuse to bad behavior on the part of a small percentage of consumers. That would be unfair to businesses and consumers that have been a victim of fraudsters and hackers. But it’s clear that data breaches are an issue that merchants are having to face more and more every day.
Retailers should be transparent with how they handle data and offer real-time communication to reassure their customers. Stronger safeguards can also help develop trust and prevent fraud and abuse.
Taking advantage where possible
Tackling returns and data breaches is only part of fixing difficult customer relationships. Today, retailers are facing consumer abuse at a level that’s never been seen before. Signifyd’s survey shows that a small but significant number of consumers feel entitled to take advantage where they can and won’t hesitate to do so.
Customer abuse is normally directed through non-fraud chargebacks. This is also known as friendly fraud. The most common variety of non-fraud chargeback occurs when items are not delivered to their address. This is a chargeback item not received claim (INR). When the customer complains to their credit card company, the card issuer takes the charge back. On behalf of the customer, the issuer will recover the money and fees from the retailer, accusing them of failing to deliver goods.
A customer may also make a SNAD claim, meaning the item was received but ask for a chargeback for item not as described.
Retailers can dispute a customer’s claim, but if it is a legitimate claim, you risk telling the customer that they’re wrong. And sometimes, legitimate mistakes are made. Packages can get lost in transit, damaged, or stolen from the doorstep. Customer issues can certainly be legitimate.
But we should always be wary of those who try to take advantage of the system. 64.8 percent of our survey respondents said that they had filed a chargeback. INRs made up 25.3 percent of experiences. Another 10 percent said the item that arrived did not live up to expectations, given the description and presentation on the merchant’s site.
18 percent said they hadn’t made the purchase they were charged for. Furthermore, 11.6 percent said someone used their credit card without their permission.
Those who were part of that 18 percent were likely fraud victims. The second group no doubt included those who had children or other relatives who used their card without their knowledge.
To build stronger relationships with customers, communication is key. By confirming orders quickly and being upfront with any snags in distribution or delivery, consumers will be aware of where their product is and when it will be delivered. This in turn can prevent unnecessary chargebacks.
Consumers want to control their shopping experience. Online shopping is no longer a novelty but the main way to buy for some consumers. It’s a fun market to be in. Building relationships with customers and curating great experiences by removing checkout friction drives business and protects both merchants and consumers, and building stronger relationships is key to reducing abuse and boosting your revenue.