Can Returns Data Still Be Beneficial When Returns Are Low? Returnalyze

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Even when return rates are low, analyzing data from returns transactions can uncover ways to improve customer experiences and increase net profits.

In a perfect world, your customers will always sail through the buying process, be satisfied with their purchases, and then quickly develop loyalty that leads to additional purchases and even brand advocacy. Sadly, this isn’t the case for even the most successful of businesses. Whether a customer has a negative experience or simply changes their mind, returns happen.

Obviously, the goal is to reduce returns as much as possible to protect your net profits. Once a low return rate has been achieved, you can sit back and relax. Right?

Well, we suppose you could do that. However, you’d be missing out on valuable opportunities. Data, even the data gained when return rates are low, can be used to improve your customers’ experiences and even increase your net profits.

What is a Low Return Rate?

When someone asks us this question, they may actually be asking us several different things. They may be asking whether their return rates are lower, higher, or on par with similar businesses. They might also be asking what’s considered a low return rate for a particular product.

Sure, it’s almost always a goal to outperform competitors in various ways, but why stop there? When it comes to return rates, businesses should be maximizing their opportunity.

 

We’re not saying that answers to these questions can’t be useful, but we have a better question. Who defines a low return rate?

Let us explain. Imagine that a business has a lower return rate compared to one of its competitors. Maybe their competitor has a 10 or 15% return rate, while they only have a 5% return rate. That’s great, right? That depends. Within a business that brings in several million dollars, a 5% return rate is not an insignificant number of returns. While this is just one very simple scenario, it highlights the idea that “low” is subjective.

Sure, it’s almost always a goal to outperform competitors in various ways, but why stop there? When it comes to return rates, businesses should be maximizing their opportunity. If that 5% return rate from earlier was reduced even by half a percentage point, it could result in a significant bump in net profits.

Data From Low Return Rates Can Still Uncover Opportunities

Even when a business is pleased with its return rates, analyzing the data from those returns can uncover valuable opportunities for improvement. For example, even among items with generally low returns, such as cosmetics, there’s almost always going to be some that aren’t performing as well due to a preventable reason.

Additionally, returns data can also uncover operational issues that may be contributing to returns. Since operations are always in flux, businesses can experience issues in a myriad of ways, from misships from someone putting an item in the wrong bin at a warehouse to new freight carriers improperly packaging products. Even something like shipping delays can increase the likelihood that a customer will return a product.

The point is that analyzing data from returns transactions can highlight opportunities for improvement. Even data from relatively low return categories can help businesses improve their customer experience. This kind of attention to detail communicates to customers that you care about their experience, which, in turn, increases loyalty and customer lifetime value.

 

Years of Returns Experience Sets Returnalyze Apart

We understand the immense power that data can have for businesses, but that’s because we also understand the importance of testing. At Returnalyze, our experts have years of experience analyzing data from multiple retailers. We know what works and what doesn’t because we’ve helped many different business models.

That’s why access to the Returnalyze Intelligent Dashboard also comes with step-by-step guidance. Yes, you’ll gain access to a wealth of data, but we’ll be by your side to help develop targeted strategies that reduce returns and increase your bottom line—even when your return rates are already low.

If you’d like to see how a partnership with Returnalyze can help you uncover opportunities even when return rates are low, schedule a demo or contact our team today.

Consumer Behavior Insight: Are Final Markdowns Really Final? Returnalyze

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Use returns data to understand the volume and channel where final markdown returns originate from to implement solutions that minimize them in the future.

Final markdowns are a useful tool to move inventory that’s out-of-season, damaged, obsolete, or simply performing poorly. Customers often purchase final markdowns because it feels like they’re getting a good deal, and retailers benefit because it allows them to liquidate inventory that may otherwise not be very profitable.

Retailers only see those benefits, however, if final markdowns are not returned. That’s why most businesses have final markdown policies that prohibit returns. Does that mean final markdowns are never returned? Unfortunately, no.

While a good portion of consumers abide by the no-return policy on final markdowns, even a small percentage of returns means that a business can lose millions of dollars. This leads us to two very important questions. First, how are these returns occurring even when a policy prohibits them? And second, how do we minimize them?

The Cost of Final Markdown Returns

Considering that most return policies for final markdowns are designed to keep these products from returning to inventory altogether, accepting these returns automatically creates additional expenses. So, whether they’re being returned in-store or online, the impact on your business can be extensive.

Imagine the costs associated with typical returns. Depending on the specific policies in place, this will involve additional customer service, transportation, warehousing costs, and more. Now, imagine that a percentage of your final markdown sales, which were never intended to be received back into inventory, are also incurring those costs.

While final markdown returns are unwanted, the data gained from these transactions can be a valuable tool when it comes to making both marketing and policy decisions.

 

While a 1% return rate on final markdowns might not sound detrimental, depending on the size of a business, that could still lead to a loss of hundreds of thousands or even millions of dollars. In order to reduce these returns, discovering how they’re taking place is essential.

What’s Fueling Final Markdown Returns?

Uncovering the driving factor behind a return is necessary to reduce both acceptable and unwanted returns. When it comes to final markdown returns, which are obviously unwanted, it’s more about pinpointing where and how the returns take place so they can be eliminated.

If these returns are occurring in brick-and-mortar stores, then it’s possible the retail staff has been allowing these transactions in spite of the policy. When it’s localized to just a few locations, speaking with local management may resolve the issue. However, if many locations allow these transactions, additional staff training that emphasizes the importance of policy enforcement may be required.

What about final markdown returns that occur online, though? It’s possible that a design flaw on the business website or even a glitch within your post-purchase platform allows these types of transactions to be approved.

Final Markdown Returns, Loyalty, and Customer Lifetime Value

Keeping customers happy may seem like the obvious strategy for improving loyalty, but it’s not always the most effective way to increase customer lifetime value. Whether a customer is returning a final sale product or simply making a normal return after the return policy period, the way businesses handle this interaction can make a sizeable impact on net revenue.

For example, imagine you have two customers. One of them makes many purchases, while the other has only purchased a few times. At first glance, you might assume the first customer is the more profitable of the two. However, imagine that the first customer is also a chronic policy abuser. While they may make more purchases than the other customer, this type of behavior actually diminishes their customer lifetime value.

While final markdown returns are unwanted, the data gained from these transactions can be a valuable tool when it comes to making both marketing and policy decisions. Are these customers that you want to continue marketing to? Should you adjust your entire return policy, or should you implement a dynamic return policy?

In an environment where brands are becoming more strict with marketing budgets and return policies, these decisions can have a major impact on net revenue.

 

Minimize Final Markdown Returns with Returns Data

The wealth of information that can be extracted from returns data can’t be overstated. It can help you understand what types of returns your business is experiencing, what’s driving them, it can uncover valuable consumer behavior insights, and more.

It can also be used to develop solutions that minimize or eliminate unwanted returns while increasing net revenue. Not only does the Returnalyze Intelligent Dashboard give you access to this type of granular data, but a partnership with Returnalyze comes with step-by-step guidance and analysis from our data experts.

Final markdown returns can be costly, but our experts will help you determine how and where these returns are taking place in addition to creating solutions that minimize these transactions.

If you’d like to see how our Intelligent Dashboard can help you reduce final markdown returns, schedule a demo or contact our team today.