What type of returners does your retail business have?

Understanding returner cohorts: Segmenting for success

Returns can be a real pain for retailers, but they're part of life in ecommerce. While many retailers are trying to crack down on the issue, understanding that not all returners are the same is an important first step. Segmenting customers into clear cohorts based on their returns behaviours can help brands significantly reduce costs, enhance profitability, and create smoother customer experiences.

In our Annual Returns Benchmark Report 2024, produced in partnership with Retail Economics, we've identified four distinct types of returners: occasional, efficient, serial, and slow (Fig. 1). Each cohort brings unique behaviours, expectations, and challenges. Let’s dive in to understand who these customers are and what makes them tick:

Occasional returners: Your low-maintenance customers

Occasional returners make up 43% of returners. They rarely send items back, typically doing so only when the product genuinely doesn’t match their expectations or if it's damaged. This group is ideal from a retailer's perspective. They tend to be satisfied customers who aren't looking to game the system or overuse return policies. Because of this, they’re also the least costly customer segment to manage. The good news? They require minimal intervention from you, allowing you to focus efforts elsewhere.

Efficient returners: Quick, clear, and helpful

Efficient returners account for 31% of returners. They promptly return items, usually in excellent condition, helping retailers restock and resell quickly. These customers genuinely value convenience and simplicity in returns processes. For retailers, efficient returners offer a reliable customer segment. They are often people who are generally easy to please and who reward brands offering smooth, streamlined returns experiences. It's worth investing in straightforward, fast processes to keep these customers loyal and satisfied for repeat business.

Serial returners: The costly challenge

Serial returners, although just 11% of returners, punch above their weight by driving 24% of total returns. This group frequently orders multiple items intending to return most, exploiting lenient returns policies to their advantage. They’re sensitive about returns policies too - around 68.5% say they’ve abandoned purchases because of unfavourable return conditions. They typically order large baskets and value speedy refunds over convenience or simplicity. While their spending can initially appear attractive, the hidden operational costs and margin pressures can quickly outweigh their value, especially in fast-paced categories like fashion and beauty.

Slow returners: Time is money

Slow returners also represent 11% of the returning customer base. They procrastinate more than others, sometimes waiting weeks before sending back unwanted items.

More widely across all returners, around 15.5% of consumers hold onto products for over 10 days, significantly diminishing resale opportunities. In fact, slow returns alone will cost UK retailers approximately £9.8 billion in 2024. Often, slow returners delay returns to benefit from cashback or rewards schemes, or simply because the process is inconvenient or unclear. This behaviour negatively impacts inventory management, especially in sectors where products quickly go out of season.

Fig 1: Returners can be considered across four key cohorts based on scale and speed of returns

Why segmentation is essential for success

As you can see from the cohorts, slow returners and serial returners are responsible for just under half the total overall returns value! Understanding these distinct cohorts gives retailers the power to tailor returns strategies and messaging effectively. Occasional and efficient returners rarely present significant issues and should be rewarded with seamless processes, clear communications, and occasional incentives to keep their loyalty high.

However, serial and slow returners require targeted interventions. For serial returners, carefully designed return policies can gently discourage opportunistic behaviours without alienating the customer entirely. Examples include introducing limited charges for excessive returns or offering store credit rather than refunds for frequent returners.

Slow returners need nudging toward quicker returns, perhaps through incentives such as loyalty points or discounts if items are returned promptly. Clearer, easier processes with multiple convenient return points can also reduce delays.

Use technology to understand your customers better

Effective customer segmentation is greatly enhanced by technology. Retailers should leverage analytics and artificial intelligence to identify different cohorts, track their returns behaviours, and proactively manage their impact. For example, advanced analytics can flag serial returners, enabling proactive customer communications and personalised policies. RFID tracking, automation, and real-time data analysis streamline returns processing, further reducing the operational burden associated with each returner type.

What does this all mean for retailers?

Effectively managing returns is about knowing your customer segments and applying smart, targeted strategies to each. By understanding these distinct cohorts, retailers can enhance customer loyalty, reduce costs, and boost long-term profitability. Correct messaging and appropriate cost structures will be critical to get right.

Download our report for more insight…

We’ve created a snappy, concise version of ZigZag Annual Shopper Research Report 2024 that you can easily share amongst your colleagues for quick insights on the four types of returns.

Need more info? The insights shared in this article are from our ZigZag Annual Returns Benchmark Report 2024, conducted in partnership with Retail Economics. To get a deeper understanding of returns cohorts and how your business can segment for success, [download your full copy here].

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