Harnessing Returns as a Retention Tool & Revenue Driver with ReturnKey
Returning an online purchase is a total hassle, both from the consumer and from the brand point of view. But with ReturnKey, it doesn’t have to be. The returns management software, founded by Dalton Fouts, is designed to make returns better for everyone.
We chatted with Dalton about launching ReturnKey, the rapidly evolving Southeast Asian digital commerce ecosystem, and how returns can actually boost brand metrics across the board.
“If executed right, world-class returns experiences can reduce operational costs and increase top-line revenue by immediately converting a refund into an exchange or repurchase opportunity.”
The Art and Science of World-Class Returns
With his previous experience working in logistics, Dalton joined Ninja Van, Southeast Asia’s fastest growing last-mile logistics startup, in 2016. During his time scaling up the growth function at Ninja Van, he notes that the business radically changed every time it grew by 3x.
From hiring your first dozen employees to building a team of one hundred, the way you approach operations and management requires additional layers of insight and accountability. As the business grew more and more complex every 3x growth cycle, returns became a key lever for Ninja Van to cut through the noise and deliver consistently world-class customer experiences.
In the last 5 years alone, Dalton points out the major shift within the logistics ecosystem in Southeast Asia: companies are finally starting to understand the importance of data. More importantly, companies are coming to terms with how analytics can better inform each step in the value chain and yield compounding improvements in driving efficiency gains.
In leveraging this data, Dalton was able to nail the art and science of helping brands figure out what to do when an item gets returned. ReturnKey, at its core, focuses on making returns more efficient, profitable, and sustainable for all parties involved.
“Even though returns are inevitable for brands, they don’t have to be painful. That’s precisely why ReturnKey exists, and why we’re here to help.”
The Outsized Opportunity in DTC Returns
20% of all goods bought online get returned, and that number shoots up to 30% when it comes to fashion and even higher-value items like luxury goods and high-end furniture. Now more than ever, consumers will immediately expect a white-glove return experience from digital brands.
Global consumers, irrespective of geography, are becoming more astute customers, and they want the same experience they’d expect if they purchased from a local department store.
ReturnKey’s value proposition centers around its ability to transform returns from one of the most painful parts of a customer’s engagement with a brand into a positive opportunity to demonstrate enduring brand values, 1-on-1 CX engagement, and new catalog rollouts.
On the ReturnKey portal, as soon as a consumer clicks the return reason, they’re presented with the appropriate outcome. Through this channel, a process that previously required hours of back and forth between a consumer and a CS agent has been quickly shifted into a few simple clicks.
Finally, the opportunity that ReturnKey is chasing is particularly compelling due to its flexible use case. Put simply, its technology can be used for any type of product with infinite SKU variants.
“Most brands view returns as a cost center for their company. Instead, they should reframe returns as a lever to improve customer retention as well as customer acquisition by giving first time buyers the confidence to add a new item to their carts.”
Value Drivers and Maximizing LTV
Before diving into the data, Dalton notes that so many retailers haven’t even taken the first step, which is actually formalizing their return policy. ReturnKey sits down with brands and will ask, “How can we take your stodgy return policy and turn it into a core revenue-driving experience?”
In his words, when a customer churns, it’s much more expensive to try and convince them to shop with the brand again than it is to acquire them in the first place. For ReturnKey, it’s all about extending customer lifetime value and tracking that data point as a North Star metric.
Dalton notes that brands not only need to track their return rate over specific cohorts and time periods, but they also need to recognize that exchanges are a subset within return rate. They’re actually a form of positive engagement since the customer is still completing the sale.
Finally, in order to further extend LTV, ReturnKey tracks the per unit profitability of various SKUs. In turn, brands are forced to shift their thinking from GMV towards net merchandise value.
“Too many retailers view their return experience in a black box and refuse to evolve. The easiest place to start is to simply codify your return policy. From there, you’ll be able to make value-driving upgrades.”
The Rising Tide: Global eCom Ecosystems
According to Dalton, one of the most interesting distinctions between Southeast Asia and the U.S. are the operating platforms, in particular the large marketplaces. For example, in Southeast Asia, Shopee is the dominant shopping platform in the region, whereas in the U.S. Amazon is still dominant, but the long-tail of storefronts still drive the large majority of customer revenue.
Another notable distinction across the global commerce landscape is the varying quality of return experiences across different markets. In Singapore, Malaysia, and the Philippines, a 2-week no questions asked return policy is standard. In Indonesia, that’s not yet the case but is changing rapidly as more D2C brands take off throughout the country.
To summarize, while eCommerce penetration is scaling rapidly year over year around the globe, consumers in emerging markets increasingly expect the same “white glove” return experience that is already the norm across the US, China, and Europe. Thus, interesting learning and arbitrage opportunities arise.
“Returns are critical because they’re the most sensitive touchpoint with customers. The more bespoke experience you can offer via branded post-purchase portals the better. That’s where ReturnKey comes in.”
- What to pledge
- How to improve
- Which tools will set you up for success
I think the most important thing brands can do in 2023 is to better manage their customer data—both ethically and effectively. There’s an opportunity for brands to know their customers better than ever before—a clear benefit for both the customer and the brand. When you manage your data correctly, you’ll create stronger and more personalized ads, creative, site experiences, and so much more.
This is a classic: Let the data guide you. Go where the buyers for your products are and communicate with them on a personal level (i.e. by persona and funnel position) and nurture those relationships (past, present, and future customers). It’s possible—all through data.
We recommend that Shopify brands analyze and update their websites using data-driven decisions. Using analytics tools such as heatmaps and scrollmaps can help brands better understand how customers are interacting with their store.
Store owners tend to make assumptions about the way customers interact with their website. Most never go back and analyze their design choices to find pain points or areas of opportunity. By using heatmaps and scrollmaps, they can see where real customers are clicking and concentrating their attention. Leveraging this data, brands can start to iterate on design and make their online store experience streamlined and intuitive.
Hotjar provides a simple way to implement heatmaps, scrollmaps, and recorded user sessions on your site, helping you acquire incredibly informative user data. Additionally, it gives you the ability to create on-site surveys, which allows you to obtain direct and often critical feedback from users about their experience.
Test various attribution models and analyze the impact on your business. At Fifty Six, we are always here to help our clients identify and optimize their approach—a critical step in any successful marketing strategy.
If I’ve said it once, I’ve said it a million times–Customer Lifetime Value. And even more importantly, Future Lifetime Value (FLTV). With the ever-growing importance of first-party data, it is crucial that brands take a good look at their CRM and FLTV metrics.
Stop allocating budgets to low-hanging fruit that doesn’t move the needle on conversion. Think about what’s really going to improve your CX and the return of undertaking different initiatives—not just on what’s top on your list of bugbears on the site!
One of the best ways to understand your customer behavior is by using HotJar. Their heat-mapping and screen recording tools shine a light on where customers are navigating to and from on your site, where they're rage clicking and experiencing frustration, and where conversion is dropping off within real life customer journeys and flows!
Understanding your customers’ pain points via data and analytics , will allow you to work with your CRO/CX Agency to solve customer frustrations and improve conversion.
Rewind backs up all product, customer, and order data for Shopify sites—essential since Shopify itself doesn’t provide this solution. It's saved so many of our clients time and money from administrative accidents.
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33% of customer service inquiries are pre-sale questions. What does this mean? If you’re not investing in customer service, you’re missing out on revenue-generating opportunities.
The benefits of elevating your customer experience:
- 10% to 25% increase in AOV for customers who engage with live chat pre-purchase
- 21x higher conversion rate for customers who reach out via Live Chat or SMS compared to other site visitors
- 87% of customers who have a great customer experience will make another purchase
- 72% of customers share positive experiences with 6 or more individuals
Gorgias is our favorite Helpdesk platform. They can reduce costs by 35%, primarily by decreasing the average ticket handle time. Their machine learning algorithms are trained on millions of ecommerce-related interactions across Gorgias’ customer base and provide accurate, automated replies for the most common ecommerce inquiries. This helps our agents resolve tickets faster, which provides the customer a seamless experience.
Trust your agency! Agencies do the same things across multiple brands and niches, so we see the trends and have the practice and experience!
Don't be afraid of data and insights. If customers aren't clicking on your emails, try a new CTA. If your ads are driving good metrics at a small spend, start scaling. If your customers are complaining about a product, look into QA! If the data tells you something isn't working, let it go and try something else!
I'm supposed to say Tydo, right? 😉
Double down on differentiation. There will be a lot of headwinds this year and standing out from the crowd will set you apart.
A picture is worth 1,000 words. A video? Probably millions. In ecommerce that value translates into engagement, acquisition, and retention—everything you need to impact your bottom line.
At soona, we've seen the we've seen the impact of creative and the continuous split testing of it yield results. Our resolution is to challenge ourselves and double down on innovation and creative optionality so that each brand we work with can distinguish themselves in a crowded sea of D2C ecomm. We'd love to see our brands share this resolution and keep pushing the creative limits.
Klaviyo. We're using it to power our email and newsletter at soona too!
Optimize your returns strategy! This can lead to valuable customer insights, enhanced user experiences, and increased revenue and customer loyalty.
Brands need to dive deeper into understanding their customers to set themselves up for success. Conduct research to gain insights into customer needs, preferences, and behaviors. By doing so, you can develop targeted strategies that will enhance customer experience and boost overall retention.
Right now I would say Gorgias. Having a good customer service tool is crucial to building strong customer relationships.
Start paying heavy attention to data, specifically around retention. We see a lot of effort put towards acquisition with the assumption that once someone buys, they are your customer forever. Instead, get to know your customer, understand their needs, and analyze their behaviors once they are on-site and judge their sentiment after they have visited. Work with a retention focused and data-driven agency to implement tools that contribute to repeat business and customer delight. It will pay dividends.
When surveyed, about 80% of ecommerce merchants think that they are delivering a great experience to their customers. However, when the same customers are surveyed, only 8% of those customers think that they are getting a great experience from the merchant. Now, more than ever, retaining loyal customers is an essential part of any online business and you should spend time with your customers to judge their experience with your website and products and offer improvements based on that feedback.
Tydo's report cards are an essential tool, along with Klaviyo for email and SMS, Recharge for subscriptions and memberships, Okendo for reviews and surveys, Rebuy for AI driven collections and upsells, Loop for self service returns... each tool is great on their own, but their strength as the ultimate tool comes from when they are used together!
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