Good Return Policy = Great Return on Investment

While sitting in rather close quarters on a 757 earlier this week, I overheard two colleagues discussing how they could improve the customer journey on their website.  Lots of ideas were discussed, from refining content to social media integration to online chat.

It got me thinking about the complete customer journey, something only halfway planned by many eCommerce companies. Without a doubt, getting shoppers to your site and converting them into customers is an important part of the journey.  But that seems to be where most marketers spend the majority (if not all) of their focus:  getting more customers to click the “Buy” button.  But is that really where the customer journey ends?

If a company’s view of the customer lifecycle is overly focused on initial purchases, I think they’re looking at the world with one eye open. Because from the customer’s viewpoint, clicking “Buy” is only a small part of the journey, and certainly not the end.

Analysis has repeatedly shown that a returning customer is much more valuable than a first time buyer.  But how much more valuable? According to research published byAdobe in November 2012, a second time buyer spends three times more than a first time buyer.  Buyers returning several times ultimately end up spending seven times the revenue associated with their original purchase.

With returning customers providing so much value, it’s ironic that more companies don’t place emphasis on what keeps customers coming back for more – easy returns.  In a recent article in Entrepreneur online, I read that Atlanta-based clothing and accessories retailer 3rd Power Outlet increased their return policy from 14 to 90 days –  and returns actually decreased.

When thinking about the customer journey on your eCommerce site, it’s important to have a holistic view of the entire journey –  including what happens after a customer hits the “Buy” button.  After all, nothing turns a first time customer into a one-time customer quicker than buyer’s remorse.

Zappo’s head of customer-loyalty, Rob Siefker, agrees that extended return policies make customers feel more comfortable about making an initial purchase – which is why they offer a 365-day return policy.  And while I’m not sure that their return policy consciously influenced my decision to become a loyal Zappo’s customer, but I haven’t visited a retail shoe store in almost two years.

So if you’re considering a more robust online return policy, you should ensure that every aspect of your online presence (traditional websites, mobile sites and apps) is updated to allow a seamless return experience.  This may require some integration with a system that generates return authorization numbers, as well as a logistics system (or partner) so return labels can be generated and printed on-demand.

And while a project of this magnitude may require an initial spend, the return on investment for a robust return policy can equal happier first-time customers.  And happier first-time customers turn into loyal returning customers, the holy grail and final destination for any marketer hoping to improve the customer journey.

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