How to Turn Returns and Exchanges Into Upselling Opportunities

Refunds and exchanges | Shopify Retail blog

In the retail world, product returns and exchanges are a fact of life. Consumer product returns account for nearly 8% of all retail sales (that’s $260 billion every year) and can even hit 10% during the winter holiday season. Customers return items for a whole myriad of reasons — plenty of which have nothing to do with product quality.

With returns being such a big part of doing business in the retail space, it’s important that you and your staff know how to handle them. From store policies to staff training to learning opportunities, you can leverage each of these to create the best experience for customers and turn a negative into a positive.

Returns Don’t Have to Be Negative

While returns can seem like a net loss, there’s a hidden opportunity there. Capitalizing on that opportunity can help you turn returns and exchanges into a positive for your business — meaning you can create a great experience for shoppers and inspire customer loyalty all while recouping the potential monetary losses that come with returns.

Returns can feel like a rebuke of your product and your store, but that isn’t usually how customers see them.

Just because a customer returns an item doesn’t mean you’ve lost that customer. Quite the opposite, actually!

According to recent research from Medallia, a great product return experience actually encourages customers to spend more money at your store. A great experience can even lead to fewer item returns down the line. Take ecommerce retailer Zappos, for example — they focus on providing customers with a seamless returns process, and that translates into a 75% repeat customer rate.

Handling customer returns and exchanges the right way can lead to a huge opportunity for your business. That’s why it’s so important for both you and your store staff to understand the right tactics for turning a return into an upselling opportunity.

How to Turn Returns and Exchanges Into Sales

There are several tactics you and your staff can draw on to help turn returns and exchanges into new sales. They all revolve around one thing: the customer experience.

Everything you do during and after product returns should aim to create a better experience for customers. Here are a few tactics you can use to make it happen.

Maintain a Positive Customer Experience

One of the most obvious ways to maintain a positive customer experience is to avoid creating friction. Friction slows customers down, makes their lives more difficult, and generally hurts customers’ perception of your brand — and the chances they’ll become a loyal customer. To keep things positive and avoid friction, follow these best practices:

  • Make returns convenient. Avoid making customers jump through all kinds of unnecessary hoops to return an item. If you sell online, let customers make returns in-store. Train all staff members to complete returns, so the process is quick and customers don’t have to search for the one customer service desk.
  • Keep your return policy hassle-free. Every retail store needs a return policy to set appropriate expectations around returns and exchanges and mitigate risks like return fraud — but that doesn’t mean your return policy should cause extra hassle for customers. Be reasonable about the window of time customers have to return items and be flexible about the documentation required (i.e. receipts, tags, etc.)

A no-hassle return policy can also help your bottom line by putting shoppers’ minds at ease. In ecommerce, particularly, knowing returns are easy and convenient helps mitigate customer indecision, leading to more sales.

  • Practice empathy. The biggest way to maintain a positive customer experience is to simply show empathy. What does that look like? For one, train staff to ask how they can make it right, especially if quality or satisfaction discrepancies caused the return.

You should also tailor your return policy based on the product itself. For example, give a little extra leeway for items where the right fit is hard to find (like women’s bathing suits). That goes double if you’re selling those items online, too.

FURTHER READING: Learn how to create a flexible return policy for your retail business.

Turn a Return Into an Exchange

Turn a return into an exchange | Shopify Retail blogSpeaking of empathy, understanding where customers are coming from when making a return is the number one key to turning a return into an exchange.

Step 1: Ask the Right Questions

To make the right recommendations (with the best chance of creating a positive experience for the customer), you need to understand their needs on a deeper level. That means asking more than the standard, “Is there anything wrong with the item?”

  • Why are they returning the item? When the reason isn’t an outright problem with product quality, customers may not immediately offer a ton of detail here. But these are vital details that enable your staff to make the best recommendations for an exchange, so it’s important to probe around to really understand the motivation for the return.
  • What expectations did the product fall short on? This question can help staff determine where the disconnect between customer expectations and the actual product lies. That adds valuable context for understanding the real reason this return is happening.
  • How were you planning to use the product? Maybe the product isn’t designed to meet the customer’s needs. That’s key for staff to understand so they can make relevant recommendations for another product that will better satisfy those needs.

Step 2: Actually Listen

Listening always seems simple, but active listening to understand (not just to respond) is a tough skill to master. And it’s an important skill for you to both cultivate in yourself and empower your staff to focus on. Here are a few tips to help you and your staff work on active and empathetic listening:

  • Cut out distractions. Pay closer attention to what customers are saying by ignoring distractions, avoiding multitasking, and looking at customers while they speak.
  • Show that you’re listening. Stop what you’re doing to listen, nod, smile, and use your body language to communicate receptiveness to what customers are saying.
  • Respond. Don’t worry about formulating a response until after the customer has finished speaking. Once they have, rephrase what you heard and ask follow-up questions to ensure you have the whole picture.

Step 3: Cross-Sell and Make Recommendations

Asking the right questions and practicing empathetic listening does two things:

  1. It helps you or your staff gather key information about the return — information that’s vital to successful cross-selling and making intelligent recommendations.
  2. It lets customers know they’re heard. Feeling respected and understood makes customers much more receptive to up- and cross-selling because they know it’s coming from a place of empathy.

Once you’ve gone through that process, the last thing you want is to lose customers here. That’s why you should spend ample time training staff on your products and how to cross-sell in a way that benefits the customer first and foremost.

Train staff on the benefits of each of your products and help them understand use cases in the wild. Teach them about product groupings that often go together. Above all, train your retail staff on creative problem-solving. Train store employees to think on their feet and offer intelligent product suggestions.

FURTHER READING: Training your staff poses its own unique challenges. Check out 10 expert tips that make it easier to get staff up to speed.

Mastering this step of the return and exchange process is where the opportunity to boost sales and inspire radical customer love really opens up.

Look for Patterns

Returns and exchanges are more than an opportunity to upsell and inspire customer loyalty — they’re also a valuable learning opportunity for your store. Returns and exchanges can give you all kinds of information around the individual products customers return and why they return them.

When someone makes a return, that signals a disconnect between customer expectations and the reality of a product. By looking for patterns in shoppers’ return and exchange activity, you can identify the products that lead to returns most often...then figure out why.

That means you can address the problem before it leads to a return. You can set the right expectations for customers before they even make a purchase, leading to fewer returns and more satisfied customers.

If you don’t manufacture your own products, tracking patterns in returns and exchanges can also help you identify products that are low quality for one reason or another (inaccurate sizing, for example.) That means you can ensure your store only stocks the best products for your customers.

Make the Most of Returns and Exchanges

Customer returns and exchanges are part of the deal when you run a retail store — but they don’t have to take a chunk out of your business. By practicing empathy, training retail staff, and working to mitigate the underlying causes of returns, you can delight customers and boost your bottom line. That’s a win-win!