The Psychology of Returns: Understanding Customer Behavior to Improve Retention 

Product returns are becoming an increasingly important challenge for online retailers. 

Irrespective of the industry, the shopping assistance offered, or the information provided to consumers, returning products online is becoming more common than ever. So much so that the average return rate experienced by online retailers hovers around 20-30%. 

In this post, we’re going to discuss the psychology of product returns and why understanding customer behavior is key today. 

Common reasons for e-commerce returns 

Despite their best efforts, here are some reasons why brands across industries see return requests: 

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• Fit issues - Most purchases get returned due to incorrect sizing or fit, especially if they do not follow the standard sizes that consumers may have tried on physically. 
• Product quality - When consumers expect a certain quality based on online promotions and descriptions and the purchase received doesn’t match the same. 
• Mismatched descriptions - When the product received does not match the online description, consumers instantly submit returns. 
• Shipping damage - Some items get damaged during shipping which results in returns that are often also accounted for in policies. 
• Wrong item sent - Mistakes in order fulfillment like sending the wrong item or the wrong variant. 
• Customer remorse - Many consumers simply change their minds about purchases after receiving an item. 
• Unwanted gifts - Brands also see increased returns when people receive gifts they didn’t want or need. 
• Delayed deliveries - Long waiting periods can cause customers to lose interest or need for the product purchased. 
• Better alternatives - When a consumer finds a more appealing product or deals on the same item. 

The psychology behind e-commerce product returns 

Here’s the psychology that leads to the above return reasons: 

1. Expectation vs reality gap

When a product doesn’t meet the customer’s perceived value of the product purchased, it results in immediate disappointment. This could happen when a product doesn’t fit as they envisioned, doesn’t have the same look and feel, or just feels like it lacks the value they have paid for/ were promised. 

This gap often stems from inaccurate product descriptions, misleading photos and videos, or insufficient information on the website. 

2. Buyer’s remorse 

84% of all shoppers have made impulse purchases. And buyer’s remorse is the emotional discomfort customers experience after making such a purchase. 

In such a scenario, customers rationalize returns to feel better and ‘recover’ the spend. Brands with high-value items or indulgent products are the most prone to this phenomenon. 

3. Post-purchase anxiety 

Another consumer psychology close to buyer’s remorse is post-purchase anxiety. This is when the customer starts to feel anxious about the purchase made due to longer wait times - which gives them more time to contemplate the product, explore alternatives, or doubt the brand’s legitimacy. 

Post-purchase anxiety usually leads to customers reconsidering their purchase altogether. 

4. Loss aversion 

Even if you have sold the product at a discount, customers dislike losing money on something they find unsatisfactory. 

If the perceived value of the product they have paid for does not add up to their expectations, they become more likely to initiate a return to ‘recover’ their investment. 

5. Analysis paralysis 

In some cases when there are too many product or product variant options, customers might second-guess their choice. 

This post-purchase behavior can result in return requests as they seek a ‘better alternative’. 

6. Social influences 

Similar to how recommendations from friends, family, and online reviews influence purchase decisions, conversations with them can result in doubts about the said purchase too. 

External validation or disapproval can also result in return requests. 

How to use return reasons to boost customer retention 

Returns are often seen as a loss in sales. But when a brand uses the data more strategically, they can use the insights to boost customer retention. Here’s how: 

1. Get to the ‘real’ reason for returns 

Most brands tend to set up a simple return label with a shipping address for sending requests or have a self-serve portal for the customer to trigger the same. 

But with solutions like Return Prime, you can go one step further. Instead of a standardized workflow to submit return requests, you can configure specific reasons for the same. This helps you guide customers through personalized return and exchange experiences based on those reasons, leading to higher engagement throughout the journey. 

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For example, when someone selects ‘changed mind’, you can automate a workflow to gather more insights on what about the product changed their preference or what they chose instead. This helps gather insights into customer preferences. 

2. Ask for photos and notes on returns 

Giving customers the ability to share photos of the defective or wrong product along with notes allows them to express their sentiments better. The more they feel heard, the higher the chances of them engaging with your brand again. 

Additionally, doing so helps your team gather the information needed to manage the conversation better and process requests accurately. 

3. Offer flexible return options 

Based on how your conversations are going and the information you gather, offer return methods tailored to specific reasons. Send a return label, let customers ship items themselves, submit a pickup, or request them to drop off items at your store. 

Offering flexible return options increases customer retention by reducing the perceived risk for buyers. This builds trust and also improves customer satisfaction in the long run. 

4. Customize refund modern based on payments 

When you gather return reasons, you’re able to also understand the urgency behind the request. This can help understand customer sentiment and skepticism, allowing you to customize refund modes based on reason or payment type. 

For instance, you can offer options like store credits and bank transfer as refund mode for cash on delivery orders. 

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5. Automate communication 

Customers face uncertainty during returns. This leads to them seeking out answers from the brand’s customer support or checking for updates on the request continually. 

By automating communication via email, SMS, or WhatsApp, brands can keep customers up-to-date on the return request. This minimizes frustration and builds trust, leading to a higher customer retention rate.

6. Use insights as optimization actionables 

Return reasons give you insight into where customers seek help in making an informed purchase decision. When you categorize requests based on return reasons, you get actionables to improve the experience you offer from product discovery, evaluation, and checkout to purchase from your site. 

This could include offering personalized shopping assistance on high-value items, a virtual call to showcase the new product, adding more product pictures and videos, improving product descriptions and FAQs, and more. 

When you use return reasons to optimize the experience offered, customers see the effort you make towards them. While this helps improve conversions, it also works proactively towards reducing your return requests. 

Conclusion

Understanding the psychology of returns is key to improving customer satisfaction and retention. 

But gathering insight from customers is easier said than done - especially when they’re frazzled with a purchase and are requesting returns. 

This is where having a simplified return experience that reduces the friction in customer engagement becomes important. 

With Return Prime, you can set up efficient self-serve portals for customers to request returns. It also lets you create automated workflows to understand return reasons, enable quick approvals, automate updates for customers, and navigate conversations accordingly - be it a refund or exchange. 

Want to know more? Book a demo of Return Prime today. 

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