Many ecommerce businesses with operations delivering physical goods are now coming to the end of the “Returns Period” where customers have sent or brought back goods purchased online or returned gifts given for Christmas.
The returns process is vital in order to maintain good customer relations and presents further sales opportunities in both the short and long term. However it must be remembered that because returns affect costs, by increasing the overhead involved, the net result is that the sales volumes you had congratulated yourself and your team for having made in the run up to the holiday are now reducing on a daily basis.
At this point it is vital to understand all of the costs involved in the “sales / acquisition”, “product / fulfilment” and “refund / customer service management” processes, because overall profitability depends on the products sold after adjusting for the costs incurred.
Q: After refunds, what proportion of sales would you still be happy with?
A: More than break even… otherwise you are in serious trouble!
There are many reasons that can lead to sale returns. Perhaps the online information provided was inadequate or overlooked by the customer during the order placing process, for example by size charts. However in most cases it is just a personal choice i.e. the item does not meet the requirements of the third party who received it as a gift. They may not like the colour, the feel or the quality of the item or it may not meet expectations. Whatever the reason the customer service team should ensure that the customer is handled in such a way as to maximise customer retention and maintain the prospect of future sales.
The Christmas “Return Period” provides a great chance to up-sell to those customers returning items which do not meet requirements and so every customer interaction should be made with a view to providing or maintaining additional sales opportunities.
Thinking about customers in demographic terms should allow the formation of ‘discount clubs’ to be built around the specific product segments. The following example is from a business which sells high end clothing brands to the 18 – 35 age groups, many of whom have disposable income left at the end of the month. Their customers were offered enrolment in a “monthly special offer club” which emailed the group offers not available elsewhere. This was easy to achieve by ensuring that offer pages were not linked to normal website navigation. The outcome was a large increase in average bag value, lower cost per acquisition and improved brand loyalty. This was bolstered further as many of this group passed information onto friends and relatives and new customers were automatically added to the ‘special monthly offer group’. This also aided social media results without any expenditure of time or money.
Other practical steps should be reviewed at this time:
- How many sales were not completed?
- Check the Q4 order abandonment to provide a to-do list of website developments for 2016
- Identify the most abandoned page as this may provide decision making information to support budget and technical focus
It is my experience that the finance lost in abandoned sales is more than enough to cover the development cost budget.
Sometimes simple changes provides major improvements in the conversions of orders for examples:
- Investigation into the ‘ most abandoned page’
- Improving security notifications on the checkout route
- Permitting ‘guest checkout’ without registration
- Increasing payment method options
There is always something you can do to increase customer acquisition and retention and this is the time of year to be making plans to improve your overall results in 2016.
If you are looking for an improvement plan specific to your business try our Free 30 Minute consultation.
[bookly-form category_id=”1″ service_id=”1″ staff_member_id=”1″]