New Consumer Report Reveals How Return Policies Impact Customer Retention

New data from Loop finds 96% of U.S. consumers believe retailer return policies directly reflect how much a brand cares about its shoppers

Loop, the leading returns platform that serves over 1,800 Shopify brands, released the findings of the “Consumer Report: How Returns Impact Customer Retention,” outlining how brands can improve their customer retention through streamlined returns processes.

“Today’s economic and market uncertainty means consumers are paying close attention to retailers’ return policies and if brands aren’t considering the customer journey beyond the point of purchase, they’re missing out on critical opportunities to build trust and boost customer retention.”

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Loop surveyed 1,000 U.S. online shoppers in July 2022 to better understand how returns impact customer retention. The report reveals customers pay close attention to a brand’s return policies, and that customers feel generous and transparent policies indicate home much the brand cares – or doesn’t care – about their customers. In fact, 57% of shoppers are willing to abandon a brand entirely when provided a poor post-purchase experience.

In July 2022, 80% of consumers said they have less confidence to spend and are cutting back on non-essential purchases. Many brands view customer returns merely as a cost-center and fail to extend customer journeys beyond the point of purchase, missing out on critical way to increase retention for their budget-conscious customer base.

“One bad return experience can result in complete consumer abandonment,” said Aaron Schwartz, President at Loop. “Today’s economic and market uncertainty means consumers are paying close attention to retailers’ return policies and if brands aren’t considering the customer journey beyond the point of purchase, they’re missing out on critical opportunities to build trust and boost customer retention.”

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Return policies must be clear, generous, and easy to understand

• Many consumers would rather eat the cost of unwanted products than engage with a confusing or time-intensive returns process and nearly half (45%) of consumers say a product price point of $50 or less would discourage them from making a return because the refunded amount isn’t worth their time and effort.

Making the logistics “just work” is key in the returns process

• 42% of shoppers prefer to drop returned items off at a shipping partner like UPS or FedEx. Nearly a quarter (24%) opt for at-home, product pick-up, and a significant chunk (18%) prefer to return products directly to a retailer’s storefront.

Product discounts and post-purchase incentives are key drivers for brand loyalty

• 87% of consumers indicate that post-purchase incentives influence their likelihood of making a first-time purchase with a retailer.
• 52% of consumers value product discounts, 41% value coupons for future purchases or in-store credit, and 34% value an unlimited returns window.

Environmental impact is another loyalty booster savvy brands can deploy

• More than half of consumers (56%) care about the environmental impact of returns “somewhat” or “a lot” — and only 20% of consumers don’t consider them at all.
• Over a third (35%) of consumers have even opted out of returning a product due to the potential environmental impact.

“Data from ‘Consumer Report: How Returns Impact Customer Retention’ proves if retailers want to ensure loyal and repeat customers, they must implement convenient and frictionless return,” continued Schwartz. “Seamless returns are no longer a nice to have but a need to have for customer retention.”