How Returns Management Influences Customer Retention
In the session titled "Looping into Loyalty: How Returns Management Influences Customer Retention", we’ll unravel the intricate relationship between effective returns management and customer loyalty. Jenny Ross, Manager of Partnerships, at Loop Returns, will share invaluable insights harvested from Loop's extensive data analysis, coming from their Ecommerce Returns Benchmark Report Fall 2023. As we navigate through real-world scenarios across varied ecommerce verticals, attendees will glean actionable strategies to refine their returns processes. The aim is to foster a seamless post-purchase experience, bolster customer loyalty, and by extension, elevate brand affinity.
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- And welcome to our next session
with Jenny Ross from Loop Returns.
Jenny, how are you doing today?
- Doing well, how are you doing Brian?
- I am doing great.
I want to be sincere for a second,
actually not for a second,
I should be sincere this whole time.
But thanks for joining us.
I know it's been just difficulty finding the schedule
to get it done, but thank you for being a session
and a speaker for our first AI CX virtual summit.
- Yeah, super excited to be here.
I'm glad we figured this out.
- Yeah, so let's just get right into it.
Maybe first again, for those that aren't aware
of Loop Returns, we'll start there.
Let us know what is Loop Returns
and what does it help provide for DTC merchants?
- Yeah, absolutely.
So you can think of Loop as a post-purchase platform
that's gonna enable brands like Alberds,
Figs, Princess Polly, Chubby's to transform returns
into exchanges.
That's gonna be our major focus.
So currently we're helping over 3,000 brands
increase customer loyalty, retain more revenue,
lower costs around reverse logistics.
And we've got a few different features
that we're focused on doing that with.
So one's gonna be instant exchanges,
shop now and bonus credit.
And that's really gonna help merchants retain
a lot of extra cash.
So in the last five years, we've even seen
that our merchants have retained $900 million in revenue.
- $900 million, that's what I'm saying.
- Yeah, it's pretty impressive.
- Yeah.
- How long has Loop been around for?
Is it quite a while now, right?
- Yeah, Loop's been around since, I wanna say about 2017.
- Okay.
- That one.
(laughs)
- No, I know you just started also at Loop.
So I like to make it hard for you, right, up front.
But I guess like, I don't know,
like I've known Loop for a while now.
So it's pretty well known in the space
when it comes to returns.
And let me actually go to that next point
where it's like, how important is a return strategy
for you?
And I ask that too because, but my mind,
and I'm sure a lot of listeners here,
when I think of returns, obviously their first thought
is the physical, like the larger physical retailers.
But, and not the, oh, the smaller D2C merchants now,
but I assume that's what is really important
is that you're giving the return strategy
and the return process to everyone
that is a D2C store.
So how important is that?
- Yeah, it's really important.
And I'm sure, like me, you've done a ton of returns
and across the board, it's something
that I never really look forward to.
It can be a really sticky point in the customer journey.
And so Loop's really trying to figure out
how we can make this process really as seamless
and non-painful as possible.
So I would say that a seamless return strategy
is gonna be able to enhance customer experience
by being able to give customers more confidence
in the purchases they're making.
It's a great way too to show a brand's commitment
to customer satisfaction.
And I think that when you couple those,
it's gonna help with customer loyalty in the long run.
So rather than having returns be a not so fun part
of the customer journey, we can really transform it
into a surprise and delight moment
to be able to really drive loyalty and retention
and give customers that kind of experience.
So by also offering, I would say other options
rather than just a return, Loop can help with exchanges,
store credit, even really push customers
to make exchanges through offering bonus credits.
So it's a really pivotal part of the post purchase journey.
And if you have a good experience,
I think you're a lot more likely to remember that
and wanna come back.
- It's, let me just get your opinion on this.
So post purchase, I feel like that word comes up
a lot more than it ever has before.
I'm gonna get your opinion on this.
Is there a reason why like so many people
are talking about the post purchase experience today
than let's say three, four or five years ago?
- Yeah, yeah, I think that maybe in the past,
brands were really kind of concerned
with figuring out the best way to create a great customer
journey up until the customer buys.
And that's great and definitely something
that I think merchants need to focus on.
But where the customer journey can then be forgotten
or not as much prioritized as after the sale already happens.
And I think people are starting to realize more and more
that being able to capitalize on the post purchase journey
and making sure that it was smoothly,
whether it's facilitating a return or an exchange
or store credit, these are really parts
where I think that the customer can not have
such a great experience.
And so by being able to focus on actually creating
a really strong experience post purchase,
that's where brands are gonna be able
to differentiate themselves and really create
that lasting impression with customers.
Personally, I know too that it's great
to have a great website and a really easy checkout experience.
But I definitely remember purchases I've made
where they make it super, super easy for me to make a return
or find the item that I really love
and wanted to get in the first place.
- Yeah, I agree.
And I do think that there's just been so much focus
on I'll just say like the marketing thing,
I could say that 'cause I think I'm a marketer,
but like on the marketing team to drive new business,
new transactions to a website
and there's just never been that emphasis on like,
okay, now what happens afterwards?
And this is where I think Loop plays such a huge role
in that process and the post purchase experience.
So off, I guess just going off of that,
I know you have thousands of clients.
You have any examples to share with us
of some of those clients that have put together,
the certain return strategy and with utilizing Loop.
- Yeah, definitely.
So like I mentioned, we're working
with over 3000 different customers now.
One that comes to mind and I think is, you know,
deployed Loop really, really successfully is A/B/8 or Nation.
So they're kind of like a lifestyle, California based brand.
They've got great hoodies and sweatpants, I'm a big fan.
But before Loop, they were using another solution
in this space and what they found was
it was really difficult to scale with them.
Their customer support team was fielding
a lot of questions around returns.
It was a really manual process.
A lot of time was being taken up.
So they didn't have the ability to really grow quickly
because, you know, they were deploying all these resources
to managing something that could have been automated.
So we started working with A/B/8 or Nation
and immediately were able to automate a lot of the
no tickets they had around returns.
We were able to instill workflows to kind of
immediately automate like these processes
that formerly their customer success agents had to manually
go in and answer questions about, you know,
how do I submit a return or can I exchange this?
Loop could instantly automate all that.
And what they were also able to do too
is really drive their customers to make exchanges, right?
Rather than returns.
So instead of seeing returns as like a huge time suck
and money suck, I think it's a really cool example
of how they were actually able to transform it from that
into like a revenue driver.
So they were able to reward customers
and incentivize them to make those exchanges.
I think that they then saw that 64% of revenue
retained from returns and $12 as an average
upsell per return.
So that's huge and you know, it definitely piles up
and actually is a great, I think, success story
for showing how returns can actually make you money.
- Yeah, no, thanks for sharing that.
I think I find it fascinating
because when you were talking about that,
what word came to me about the entire returns process
and strategy was the word being proactive.
And I say that because when you were describing
the challenges and even the solutions,
it was really centered around like,
okay, there's going to be returns.
So how do you get in front of that?
They're going to be returning certain items.
So how do you make sure that like those items then
come back to making money and revenue
and not a loss of revenue?
Is that kind of like a lot of conversations
that it's centered around being more proactive
in that post purchase kind of experience?
- Yeah, yeah, definitely.
I think that being proactive and more like
what kind of saying, figuring out where are the different
points that maybe were kind of weak in our returns strategy.
So maybe there's a lot of manual work,
maybe we're offering customers only the chance
to manually like fill out a form to create a return
or maybe we're not offering exchanges.
Like all of these kind of weak points,
I think are things that loop is really good at
identifying and then turning to actually become
really strong ways that'll either help automate
or improve customer experience or drive more revenue
for a brand.
- Is it, and I want to ask you in your perspective,
even outside of working for loop,
like I assume it's really important to educate
consumers and buyers of a brand on just the returns policies
beforehand or do you think it's the opposite
of like, oh, if you're bringing up all these returns,
maybe it puts the thought it's like,
oh, maybe this product is not the good fit
and they get a whole bunch of returns on anyway.
I guess let me ask you as a consumer,
is it really important to know that
to know the new returns policy beforehand?
- Yeah, yeah, well, it's interesting.
I know that I was surprised when I came to loop
and was starting to learn more about the market.
I'm forgetting the exact percentage,
but the majority of shoppers before they make a purchase
will actually look at the returns policy
to see what flexibility they have with that going forward.
So myself personally, I should probably look at which are
more because sometimes I'll get stuck with final sale
and it's not the best experience for me,
but I do know that as a whole,
making sure that customers have this flexibility
is more and more important.
I would say that Amazon, for example,
has done a great job creating a really easy returns experience
and that's what customers are super familiar with,
is this frictionless Amazon will pick up your return
from your door, you can drop it off at Whole Foods.
And so customers are starting to expect that
even when they're not shopping at Amazon.
- I love that because like that insight
of everyone probably is searching for your brand
and return policy,
one, I'm a marketer from an SEO perspective.
So I would tell every single merchant to like build that page,
like you have to have a returns page
with people who are already probably googling that
and trying to find that anyway.
And I assume that even has to help
in the conversion process as well to
and improve your conversion rates.
Is that something, actually just a random question,
does Loot measure that?
Like if it actually helps in the conversion process
in the first?
- I'm not sure if we have its specific percentages
around conversion rate data for that.
I will say though that, you know,
if you look at a brand
and they do have a really flexible return policy,
I know there are some merchants out there
that are priding themselves on doing,
you know, a year long return policy.
As a customer, I would find it hard to imagine
that that wouldn't compel you to wanna check out faster.
So, you know, I think that deploying
those really flexible, very kind of human first policies
would definitely uplift conversion rates
and just give the customer like more trust in the brand.
- And I would probably finalize on this point
where it's like, it's a point in the customer journey.
No matter where you think if it would factor
into the conversion rate or not,
it is a point that people are hitting the returns page.
Okay, so this goes into,
there's a lot of sessions today
that talk about data because when we're thinking about AI,
AI is only as important as the data that is learning from.
And so I wanna ask you when it comes to returns strategy,
is there one, I guess two part question,
one, is there data that loop returns is collecting?
And two, if it is collecting, like what type of data
is something like loop returns collecting for a merchant?
- Yeah, and there's gonna be a lot of data
that loop will collect.
I think though, that one of the most important areas
of that data though, is really gonna be
around return reasons.
So when a customer goes through the loop returns flow,
they'll be asked a series of questions,
things like, what was the reason for making this return?
Maybe your t-shirt was too big that you ordered.
Then there might be a situational followup question,
was it too big, was it too small,
was it the wrong color to kind of get more data
on that first question?
And then we'll also allow merchants to offer
an optional comment box so that they can really get
that feedback from customers.
So things like return reasons are gonna be able to allow
merchants to see certain patterns in how their shoppers
are behaving.
And I would say that that customer feedback
is really invaluable.
It'll be able to help merchants be able to optimize
the return process, minimize return rates going forward,
and offer more personalized returns solutions
for their customers.
So absolutely, lots of data kind of gets incorporated
into loop, but the most important one that I think
can really be a game changer for merchants
is understanding customer feedback.
- And have you heard of any merchants like changing anything
up based on that customer feedback?
- Yeah, definitely.
I don't know if I can share this specific name,
but I know that there have been instances, right?
If, for example, I think there was a hemline
that was not the right kind of length,
and a lot of people said, "This is too short,
"this is too short, it's not working."
And you're able to then kind of get that.
And then I think that the brand was able to kind of change
how they were manufacturing that piece.
And imagine that you can have kind of similar situations too
with verticals where like fit is really important.
So things like fashion,
intimates, swimwear, footwear is gonna be really big,
getting that data so that you can make the best possible
shoe or bathing suit or whatever it might be
is gonna help, you know, you make better products
and that should help with your business overall.
- Oh, I think that's super fascinating.
When it, well, let me just ask you, when,
and again, if you have any examples, great,
if you don't, would just like your opinion on this,
but the data that Loops collecting,
do merchants push that data,
utilize that data into other platforms?
- Or do, I would say like your companies today using Loops,
really keep it in the Loops platform and analyze it
and utilize it only within your platform.
- Yeah, Loop has a lot of different integrations
that I think really benefit from that data.
So, you know, for example, we partner with help desks
like customer, right?
To kind of pull all of that returns data
into customers backend.
So that when support agents are working on a ticket,
they're able to consolidate all that information
into one place, which is great.
Another example too would be, you know,
what the bold metrics,
bold metrics is really focused on figuring out
how to, I guess, mitigate returns
by giving the right measurements for, you know,
a certain piece of code.
And so we're actually able to kind of work with bold metrics,
make sure that customers are getting the right data
to make the most informed purchase.
And, you know, we can pass back data back and forth
to make sure that that's happening as much as possible
and as efficiently as possible.
So we definitely don't want to make sure that,
definitely want to make sure that our data
isn't just a big and loop,
but instead working with all these other technologies
to really help solve these questions for merchants.
- Right, because again,
if it comes to improving customer experience, right,
you do that through your customer touch points.
So then it's utilizing this data across
if you're sending out SMS messages,
if you're sending out emails, the chat, anything, right?
And you're able to do that, is that correct?
That's awesome.
Okay, so this kind of leads me to one,
maybe, and I'll take a step back here.
Like it's a holistic question when I assume,
maybe I'm wrong here,
but like the best returns policy is like,
you can return it whenever you want.
And you have five, 10 years or lifetime
to return certain items.
Now, how would you balance a returns,
like a good returns policy with
the financial implications at the end of the day?
And do you, like, I guess, do you have an opinion on that?
Does loop have an opinion on that?
And what do you tell those merchants
that are trying to understand
what should be their returns policy?
Yeah, yeah, absolutely.
It's a great question,
and you're actually reminding me,
my mom has a great story
where she bought a pair of bean boots back in college
and tried them on, I guess, 40 or so years later,
and realized they weren't fitting the same way they did
when she was 19,
and actually took them back to LL Bean
and was able to get a new pair of boots,
which is, I think, just the coolest--
- That's such a cool story.
- I could testament to LL Bean
and how they treat their customers.
I don't know if that policy is still--
(laughing)
- I'm sure they're like, oh gosh, what would we do here?
- Which points to your question, right,
of how do you balance a really flexible return policy
with the financials of it?
So, you know, I think that loop would,
kind of falls on the side of really need to have a balance
in giving your customers that flexibility,
showing that trust,
and also making financial decisions
that make a lot of sense for your business.
So, it's kind of a push and pull.
I would say that over the last five years,
loop has helped almost 4,000 brands strike that balance,
and it's gonna depend on the brand's really unique needs.
So, some brands prefer cost efficiencies
above customer experience,
other brands really value the customer experience
over cost efficiencies.
So, we're really about kind of finding
what's that middle ground will help customers kind of find that,
and then creating the policies with them
to kind of strike that perfect balance.
So, it really think that loop is great
at kind of getting that hybrid approach and strategy
formulated for each of our customers.
I guess, I didn't realize this,
but from your answer, the brand,
and knowing the brand plays a big part of that.
Is that correct?
Okay.
Because it's like the brand strategy,
and whatever that is,
we'll kind of already tell your consumer and your merchant,
or I'm sorry, you're just your consumer, like,
oh, they're probably,
they probably already have a 365 day return policy
compared to like, oh no, it's probably pretty restricted.
Do you see that within some of your merchants already?
You mean?
Were their brands kind of tells like the story
of what their return policy is?
Yeah, yeah, absolutely.
There's definitely been a rise of,
first thing that pops to my head is like mattress companies,
right?
There's all sorts of really exciting,
data-c, you know, social media forward mattress brands,
and they're kind of sharing with their customers,
you know, use our mattress for a year
and see if you like it, right?
So in those cases,
you do want to give brands or customers that flexibility,
because you can't just lie on a mattress for five minutes
and decide this will work for, you know,
the next five, 10 years, whatever it is.
So in those cases, you know,
they might want to branch out
and be a little bit more flexible.
On the other hand, if you're working,
you know, if you're a cosmetics merchant,
you might want to be a little less lenient
on your return policies,
just because, you know,
there are all sorts of factors to take into consideration there,
like, you know, how hygienic is it
to have people using products,
testing them and then returning them.
So I think it really depends by vertical.
- It probably also depends on the lifetime,
not the lifetime value,
but how long you retain customers for,
because there's probably certain brands that are like,
"Oh yeah, it's like one or two or three purchases,"
and that's really what they're optimizing for
at the end of the day,
or there's some brands that are like LLB,
where it's like they want to have a customer for life,
where then a great returns policy benefits them
and their products in their brand, I assume.
Super interesting.
Okay, so let me kind of ask you more about,
I know I feel like sometimes we're in the future right now,
but when it comes to returns,
any kind of future innovations that you see coming
in the return space,
anything that maybe you can even share
like your team is thinking about
in return policies that are more to come for brands
to utilize?
- Yeah, definitely.
So one that we actually just launched
is a product on warranties, right?
So kind of similar to that LLB story,
we're trying to help automate brands
and their approach to handling those warranty policies.
This is something that we're seeing come up
more and more and merchants are needing more efficiencies
in this space.
So essentially, merchants are able to create
unique return policies specifically
around product quality guarantees
and allow shoppers to kind of self-serve those requests.
So in that situation,
I'm going to run through any portal
to kind of ask for that new pair of boots that she got.
And she wouldn't have had to reach out to customer service.
She could have just fulfilled it herself.
So I think that that's a really cool point of automation
that we're seeing more and more brands,
wanna streamline operations for.
Another one too that I think we'll be seeing more and more of
and that I think is super interesting is fraud.
Returns fraud is definitely something
that I think more and more consumers are learning
what loopholes to work and how they can kind of take advantage
of some of these policies.
And so figuring out a nice balance of how to mitigate fraud,
prevent fraud and not have substantial losses there
while also giving customers flexibility is a tough balance
and something that Luke was thinking a lot about.
- I assume, and again, I know you're not on the product side
but when it comes to AI, my bet is that AI really will help
loop on your stand and merchants understand
probably fraud use cases.
Do you think so as well?
- Yeah, absolutely.
I actually used to work in a out of fraud e-commerce company
and the amount that they're leveraging AI,
I think is really impactful
and frankly, probably the only super effective way
to keep a lack of about fraud is leveraging AI.
- Okay, and this leads me to the last question.
And I wanted this discussion to be more
about the customer experience
'cause I think that's what returns policy is
but I have to kind of end on AI as well too.
So any thoughts on like utilizing AI in the returns space,
any merchants utilizing that already
and any of your thoughts about it?
- Yeah, definitely.
I think that as AI becomes more and more prevalent,
this is gonna be just something that is gonna be more
and more top of mind for merchants.
The way that we see it right now is that AI will be able
to help merchants really better understand that return data
that we were talking about
so that they can make smarter, more informed decisions
way forward.
They can make sure, for example,
that AI is identifying like a certain item
that's returned due to a sizing error more than others.
AI would be able to give you this metadata
that'll help give information to fix that issue
and can prevent that going forward.
So basically AI can just simply enable merchants
to get to know their customers on a much deeper level
than I think we're even aware of right now.
- Yeah, I mean, I think it just lends itself
to the personalization that's yet to come
and then especially during a returns experience.
Like I can imagine if we're also optimizing,
all these platforms are optimizing for like
really personalized customer experience,
utilizing all the data.
Gosh, when it comes to returns,
like there's probably so much information you already know
about this person, what they're returning
and probably even product recommendations fall too
of like, well, what else that they consider, right?
- Yep, definitely.
- Maybe even like before someone purchases,
probably the likelihood that they are going to it.
Did you already have that?
No, you don't, okay.
- The likelihood that someone is--
- That they will return, yeah.
- That's the thing, your return.
- Based on like their history, the product history
and there's probably another variable in there as well.
- We don't currently, but I wouldn't be surprised
in sometime in the future if that becomes,
if that becomes, you know,
we're part of our platform or just a bigger part of this space.
- That's cool, well, there's probably a lot.
There's a lot to think about there and,
and again, I just wanna say thanks, Jenny.
Like, I really appreciate your time here,
really appreciate it, it loops part of this.
I wish you all the best throughout the rest of the year
when I don't really have a couple of weeks left,
but that's when you said 2024.
- Yeah, no, thank you so much, Brian.
Really glad we got to do this.
This was such a great chat, really appreciate it.
- Cool, thanks all.
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