The over-buying customer is a tricky customer to handle. They love to bring the shop to them, they buy a ton of clothing options online to try on at home, fully intending to return a large chunk of their purchases. They think they are a retailers golden customer and retailers may also see them this way, just look at how much money they spend, how many items they buy, how often they buy, but if a retailer doesn’t measure their return rate they can be getting the wrong picture.
Retailers may think they are a golden customer, but they can be getting the wrong picture
Typically, success in marketing is measured by getting customers to buy more, so why wouldn’t this be encouraged? Well although this group can be profitable, the high cost of serving these customers as they continually return huge portions of their orders means the profit margin is very slim.
This group have a high cost to serve and provide a slim profit margin
Add to this the cost of the promotions such as free delivery or 20% off that retailers send to these customers thinking they are their most lucrative, and the margin becomes even slimmer. Certain over-buyers will use these incentives to their advantage and they can encourage their behaviour, particularly offers such as ‘spend £100 to get free delivery’.
Identify these people and adjust your targeting
So how do you tackle this behaviour? We aren’t suggesting that you scrap these kind of incentives, only target them to the people who are less costly to serve and more profitable. You can also encourage these customers to do their decision making in store, perhaps by making certain orders reserve and collect in-store only.
The Clear Returns model can identify these customers allowing retailers to take action to reduce the cost of serving them while still maintaining loyalty and customer satisfaction.