Customer Returns as an Acquisition Strategy

  |  November 30, 2007   |  Comments

Three scenarios to convert gift recipients to loyal customers.

Every year around this time, our collective thoughts center on what to do with all the new customers shopping with us for the first time. We create strategies to learn about these new customers and try to retain them throughout the next year. Problem is, a sizeable chunk of these visitors are gift givers, and we've addressed strategies for winning them over throughout the off-season.

Can we attract the gift recipients? We really never come into contact with them unless they register a product. But there is another time when we may come into contact with them, and it's often a missed opportunity to convert them into customers: when they return a gift to you because they didn't want or like it.

While it might not be intuitive to think of customer returns as an acquisition avenue, it makes a lot of sense. The best time to create loyal customers is when something goes wrong. This is a well-known adage in the customer-service industry, as the loudest complainers can be turned into the loudest supporters.

The same logic holds true for gift returns. Customers received a gift from your brand or your store. They return it. That doesn't mean they don't like you; they just don't like the product. Maybe they wanted a better version than the one they received, or maybe they already own it. There's an opportunity to understand why customers are returning the gift and how to sell other items during the return transaction.

Let's look at a few scenarios for customer returns. In all these scenarios, we assume two things: your marketing and packaging clearly tells the user how to go online for instructions for returning the merchandise, and a return results in store credit. These scenarios can be played out in a physical store as well, but we'll stick to online examples.

Because we're talking about customer acquisition, we'll assume our example customer has no previous knowledge or experience with your store or brand.

Janet is returning a gift she received over the holidays. She goes to your Web site, clicks on the link for returns, and enters the information about her product and possibly a transaction ID (if the gift giver gave her a gift receipt). Then the system asks Janet why she is returning the product.

Here are some scenarios based on her response to this multiple-choice question. (Note: I'm omitting "it's broken" scenarios because the gift recipient might just want the product replaced.)

I Have No Need for This Product

In this scenario, Janet simply has no use for the product. In this case, the next page should do the following:

  • Introduce Janet to the brand. The page should identify the types of products you sell or solutions you provide. What is the complete breadth of merchandise and offerings available?

  • Show Janet top-selling products for each of your top categories.

  • Show her a list of products with an equal or lesser price, so she knows what she can exchange her gift for without spending more money.

  • Show her some more expensive products, and make sure the price is the difference between the gift she's returning and the new price. In other words, instead of showing the price as $230, show the price as "+$50," if the gift is worth $180. This technique will make up-selling a lot easier, because the price shown is much lower and really reflects Janet's actual out-of-pocket expense to buy the more expensive product.

  • Provide places for Janet to sign up to receive information or newsletters about products that are within the returned gift's price range.

I Need More Functionality Than This Product Offers

In this scenario, the gift-giver was correct in assessing Janet's need for the product. Unfortunately, he got the details wrong. Maybe it was a printer that's not fast enough, software for the wrong operating system, or a camera without enough megapixels.

In this case, the next page should do the following:

  • Show a product lineup that indicates where the current product fits in the line; that is, list the less and more expensive versions of the product.

  • If you have a "people who looked at X product also looked at Y product" list that you display on your product detail page, this is a great place to include that functionality.

  • Some vendors, like Coremetrics, have additional analyses that tell you what people who abandoned product X eventually bought. That list would be great on this page as well.

  • Provide places for Janet to sign up to receive tips and other information surrounding the product line

I Already Own This Product

This is an easy one. The marketing you do for users once they have purchased a product applies in this case. In essence, Janet has already purchased this product, so you can show her what else to buy. This page should show:

  • Accessories for the product

  • "Complete the outfit" functionality, if you sell apparel

  • "People who bought X also bought Y" lists for the product being returned

  • Sign ups for e-mail that contains accessories for and tips about the product

Customer Returns as an Acquisition Tool

These scenarios are just the tip of the iceberg, but they should provide enough detail to get you brainstorming. You have a lot of time between now and January, because your site's on lockdown until Q4 is over. So, get to work! Think of creative ways to harness the customer interaction you have when Janet returns a product in January that someone bought her in December. You have a real potential to turn this gift recipient into a loyal customer, or at the very least get her registered and in your active user database for future marketing efforts.

Thoughts, comments, questions? Let me know.

Until next time...


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Jack Aaronson

Jack Aaronson, CEO of The Aaronson Group and corporate lecturer, is a sought-after expert on enhanced user experiences, customer conversion, retention, and loyalty. If only a small percentage of people who arrive at your home page transact with your company (and even fewer return to transact again), Jack and his company can help. He also publishes a newsletter about multichannel marketing, personalization, user experience, and other related issues. He has keynoted most major marketing conferences around the world and regularly speaks at and other major industry shows. You can learn more about Jack through his LinkedIn profile.

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