The Data Impacting CX and Growth That Chief Digital Officers Are Missing
In e-commerce, the data-driven strategies that begin at the desk of the chief digital officer decide how a business operates today—and lay the groundwork for tomorrow’s growth and efficiency. When we talk about data in e-commerce, we’re usually talking about two broad types of data: sales or operational. But there’s a third stream that is being neglected. Without it, the integrity and value of a retailer’s data is compromised and, worse, the business intelligence that drives critical decision making around customers is incomplete.
What data is missing? Returns.
The absence of true returns data means that many retailers do not have an end-to-end view of their business, even though this can fundamentally change the way they approach customers and products. By treating returns as low priority and sticking with a paper-based system over a digital process, many are missing a golden opportunity to harvest some very valuable data and harness its insights in key areas. This is simply because most returns processes contain inherent flaws when it comes to gaining accurate and timely information. The paper return labels themselves are easily lost or accidentally destroyed; completion can be careless or inaccurate; and an additional task of data entry when the parcel arrives at the warehouse slows everything down further.
Going digital throws brand-new metrics into the mix, speeds up the workflow, is flexible and manageable, and can give e-commerce businesses the power to collect truly valuable information directly from their customers—from the moment they decide to make a return. So what are the key data points that are potentially missing by sticking with paper returns?
Customer experience: You might be of the opinion that increasing sales is the benchmark for success, but based on the models of companies like Amazon and ASOS, for example, it’s a pretty fair bet that if retailers are not paying attention to their returns, they are losing sales and don’t even know it. Returns matter to customers, and when they have a good experience, research shows that they will shop with a retailer again—84 percent said so in recent YouGov research commissioned by Doddle of U.S. adults.
When a customer makes a return using a digital portal, a retailer can ask the questions that matter before the customer is issued a means to return (typically a QR code, sometimes a label to print). That means the business can give the customer the option to tell it more. This ensures the retailer is getting useful and thoughtful data, direct from the customer with no intermediaries. Then it can keep in touch with the customer, letting him know that the return is being processed and when the refund is due. These are precisely the kind of actions that keep a brand top-of-mind and ensure that customers feel reassured by their service.
Revenue recovery: Returns can clearly impact profitability, and first-time purchases in particular are not usually profitable, simply because of acquisition costs. So when a purchase ends in a return, the ability to convert it into a repurchase can turn a one-time shopper into a repeat customer.
Equally, this is a golden opportunity to test what approach works best—an exchange, the issuing of store credit, or the use of a discount code or voucher issued at the point of return, for example. Or a combination of all, depending upon a retailer’s customer segments. Either way, the retailer will be closer to knowing what makes customers tick, while turning returns into an effective new marketing tool.
The issue of “wardrobing” often rears its ugly head, and this is also an area where a digital approach to returns comes into its own. Digital returns can let retailers track and flag customers who engage excessively in this behavior and allow them to put deterrents in place (for example, making them pay for return shipping). Their data can also be quickly removed from marketing communications to mitigate further losses.
Operational costs: How can retailers know if they really have an accurate view of their costs (or take action to improve them) if they don’t have data for the full life cycle of a product—including how, why, and when it returned to stock? Forward planning for resale scenarios is based entirely on the reasons for and speed to return. In an ideal world, retailers should be able to quickly apply the appropriate actions to an item that is coming back before it leaves the customer’s hands—faster shipping for in-demand items, a change of location for damaged goods, or diversions to secondary markets for off-season products.
But further, a clear, timely understanding of why the item is being sent back is key to reducing the absolute rate of returns. Are the product images misleading? Change them. Is the sizing inaccurate? Make that revision. Is the product prone to breakage? One can discover why. Every product that receives this level of attention will surely come back less.
Returns data has a vital role to play far beyond the warehouse, and it should be influencing and informing decisions about a retailer’s strategy as well as its day-to-day operations. Its inclusion raises the quality of data overall, across departments and functions.
Simple adjustments (based on returns data) to the scope and presentation of inventory can directly translate into sales growth and an ongoing program of returns reduction. The goal for chief digital officers has to be a business where return rates and reasons by segment and product are captured, classified, and converted into meaningful action.
Dan Nevin is chief revenue officer, global retail, at Doddle. He joined the company in 2019. Nevin heads up the retail team and is responsible for the global retail go-to-market strategy.