How can you correctly assess the effectiveness of your e-commerce returns management policy? What do you need to measure to analyze your returns ?
If you already have a good returns policy, you know that the most important thing is to maximize customer retention and satisfaction. However, it’s not always easy to choose the right indicators and interpret them correctly.
Here are the KPIs to watch out for
What should you measure for returns?
Return rate
This is obviously the first indicator you think of, and the standard one. By definition, a return is an order, or part of an order, that is returned to the brand. You can then classify them according to different causes: either the return is due to an error on the part of the e-tailer, or it’s due to the customer having changed his mind.
Your return rate tells you what percentage of your orders have been returned as a proportion of all orders placed.
The return rate is calculated as follows:
Items returned / Total items ordered
It should be noted that return rates vary depending on the sector of activity. The textile sector, for example, is more affected than the electronics sector. There are also differences between countries. In Germany, consumers have an easy time returning goods. This is partly due to a payment method widely used by Germans, which charges the buyer 30 days after purchase. So they don’t pay when they order.
The return rate enables you to analyze problems linked, for example, to the manufacture of the product or the way in which you promote it on your site. Either the product didn’t meet your customers’ expectations in terms of quality, or your brand didn’t live up to what was communicated through marketing (descriptions and characteristics of online product sheets, photos, etc.).
Remember to look at the time spent for each return. You don’t want your teams to spend too much time managing returns. If you’re spending too much time managing returns, you’re not using the right tools.
The exchange rate
A well-structured returns policy encourages exchanges rather than refunds. That’s why it’s important for you to segment your return requests to get a finer analysis of your production and marketing actions.
Here’s how to calculate it:
Items exchanged during a period / Total items returned during the same period
This rate tells you the percentage of returns where you still retain a customer. Exchanges maintain the relationship with your customers, whereas a refund is more likely to signal the end of that relationship. Create return surveys and questionnaires to find out the reasons for these exchanges, and discover how you can improve your customers’ post-purchase experience .
Reimbursement indicators
Refund indicators help you judge the quality of your returns policy. Here are the 3 main indicators to monitor:
Click to refund: time in calendar days between the first scan date and the refund date.
Refund time: time in working days between the date of possession (arrival in the warehouse) and the date of refund.
Delay in repayment: delay in repayment in calendar days / theoretical repayment period.
You can monitor these indicators yourself, or equip yourself with a solution that helps you analyze this specific point during the post-purchase phase.