Transform BFCM Returns into Exchanges: Shifting Consumer Behavior with Subtle Guidance

During the peak season of Black Friday and Cyber Monday (BFCM), retailers often face the challenge of high customer acquisition costs (CAC) alongside an increase in return rates. This combination can have a detrimental effect on a merchant’s bottom line, wasting both effort and investment. 

To mitigate the impact of returns on revenue, retailers must focus on changing customer behaviors to turn returns into exchanges. In this article, we’ll share proven strategies for recapturing more revenue from your BFCM returns and optimizing the entire returns process to increase sales.  

Don’t let returns take a bite out of your BFCM revenue

When it comes to peak season returns, the numbers are staggering. The National Retail Federation estimates that more than 15% of holiday merchandise will be returned this year. When you factor in the fact that CAC is about 13% higher during BFCM, that’s a lot of lost revenue. 

If you want to change shopper behavior, you have to look at the main reasons why they make returns. Research shows that the top reason products are returned is due to incorrect size, bad fit, or color (55% of respondents), followed by damaged or defective products (48%) and poor quality (46%). What do all of those reasons have in common? They’re all examples of unmet expectations. 

Instead of simply offering a refund for a return, work on convincing customers to make an exchange. The best way to retain that revenue is by guiding them to a product that will better fit their needs. 

How to encourage more exchanges from BFCM returns 

There are several ways to shift consumer behavior around refunds and returns and encourage them to embrace exchanges instead. It all comes down to flexibility, incentives, and personalization.

Provide multiple return resolution options

The more options you offer customers making a return, the more likely you are to retain revenue. When looking at data from last year’s BFCM returns and exchanges, we found that retailers who enabled three or more return resolution options had a revenue retention rate of more than 30%.

Looking into the data further, the top-resolution mixes all had one thing in common — exchange for other items. Merchants who offered this option saw an average of nearly 12% in increased upsell revenue. Store credit and return for the same item also allow retailers to retain revenue from returns.

Offer incentives for shoppers who opt for alternatives to refunds

Providing incentives to customers who wish to make a return if they opt for a resolution besides a refund is an effective way to shift customer behavior. Everyone loves a deal, and if they get a fixed dollar amount or percentage of their refund as a bonus, they’ll see the value in opting for store credit or an exchange instead.

For example, say a customer spent $100 with you. They can return the unwanted item and get a refund of $100, or they can get store credit plus a $10 bonus for $110. If a customer likes your brand and products, they’re likely to opt for the store credit — and you spent $10 vs. losing $100. 

Make personalized product recommendations to attract shoppers to exchange

If a customer is returning an item because of size or fit issues, offering a 1:1 exchange is an easy fix. But if they’re returning an item because they didn’t like it, or because it just didn’t work for them, they may need a bit more guidance. That’s where personalized product recommendations come in handy. 

AI-powered solutions can help you deliver the right products to customers in lieu of a refund, giving you the opportunity to sell items at a higher price point or add more items to an order. 

How AfterShip Returns can help turn BFCM returns into exchanges

AfterShip Returns offers merchants a comprehensive solution for transforming product returns into new opportunities. With multiple resolutions including exchanges, bonus credits, and refunds for store credit, AfterShip users are able to offer an enhanced returns and exchanges experience, reduce returns-related costs, and retain more revenue.

AfterShip recently launched an optimized flow designed specifically for BFCM returns. This feature encourages shoppers to choose alternatives to refunds. Here’s how it works: 

Increased touchpoints help to retain customers across the return journey

By highlighting exchange options first, you can make variation swapping easy.

Pop-up windows with bonus credits encourage customers to make exchanges

“Shop now” pop-ups show customers what they can buy with incentivized store credit, while still giving them the option to seek a refund. 

“Refund to store credit” keeps customers engaged with you

As a last chance to keep customers in your store even if they’ve chosen “refund,” offer them the option of store credit. This gives customers a reason to come back to your store and continue their relationship with your brand.

Allow partial return for bundles to retain more revenue

Customers who purchase bundled products and want to return only part of their order often have to return everything and repurchase individual items, leading to friction and a less-than-stellar customer experience. Giving customers the option for partial bundle returns means more retained revenue and more satisfied shoppers. 

Smart product recommendations make it easy for customers to find an exchange item

Instead of prompting customers to browse your store to find an item to exchange with the one they’re returning, surface the products they’re most likely to buy at crucial touchpoints. Provide product recommendations based on smart AI algorithms, such as similar products, best sellers, new arrivals, and frequently bought together on exchange pages. 

Turn the headache of BFCM returns into recaptured revenue

More sales during peak season inevitably lead to more returns, but that doesn’t mean you need to let that revenue go. Provide a flexible, convenient returns experience to your customers and you’ll be able to retain and grow revenue alongside improved retention and loyalty. Learn more about how AfterShip can help you protect your revenue this holiday season.