For many retailers, returns have long been viewed as a necessary evil – a logistical challenge that eats into margins and complicates inventory management. For today’s consumers, returns are an essential part of the shopping experience, and for brands that get it right, returns can be a powerful loyalty lever.
The New Reality of Returns
The numbers tell the story: In 2024, retailers expected an annual return rate of about 17% – double what it was just five years ago. And during the holidays, that rate was projected to climb even higher. Consumers have grown accustomed to seamless, hassle-free returns, and anything less can be a deal-breaker. In fact, 76% of shoppers say free returns are a key factor in where they choose to shop, while 67% would abandon a retailer entirely after a negative return experience.
Retailers are taking note – over two-thirds say they’re prioritizing return policy enhancements in the next six months. But here’s where a missed opportunity lies: Few brands leverage their loyalty programs to improve the returns experience. Even fewer market these benefits well enough for members to realize the perks they have.
That’s a gap worth closing.
Returns as a Loyalty Advantage
What if retailers stopped viewing returns purely as a cost center and started seeing them as a relationship-building opportunity? Some brands are already taking steps in this direction, offering loyalty program members and cardholders exclusive return perks, and there’s still room to innovate.
Here are three key ways loyalty programs can turn returns from a pain point into a competitive advantage:
- Tiered Return Privileges: Higher-tier members shouldn’t just get better discounts or early access to sales, they should also get a better returns experience. Think extended return windows, VIP processing for faster refunds, and frictionless receipt-free returns. Treating returns as a premium loyalty benefit not only rewards high-value customers but also gives shoppers a compelling reason to engage more deeply with the program.
- Seasonal Return Extensions Beyond the Holidays: Many retailers offer extended return windows during the holiday season, but what about throughout the rest of the year? Brands could create loyalty-driven “return with ease” events tied to key shopping moments – back-to-school season, summer sales, or big online promotions. This keeps members engaged and reinforces the value of belonging to the program.
- Exclusive Perks for Cardholders: Store credit cards already offer perks like extra discounts or financing options, but they could also enhance the returns experience. Consider free mail-in returns for cardholders or double points when returns are processed as exchanges rather than refunds. These small changes can increase engagement and encourage customers to keep shopping within the ecosystem.
A Competitive Scan: How Return Perks Set Loyalty Programs Apart
A closer look at the competitive landscape reveals that while many retailers offer free returns, few extend meaningful return perks exclusively to their loyalty members. Nordstrom, for example, has long been recognized for its customer-first approach, offering free mail-in and in-store returns with no set return window – one of the most flexible policies in retail. While this approach naturally fosters customer loyalty, there’s an opportunity to take it even further by introducing exclusive return perks for Nordy Club members, reinforcing deeper engagement with their most loyal shoppers.
Other brands are already using return policies as a loyalty differentiator. Target’s RedCard holders receive an additional 30 days to return most items, giving members a tangible reason to keep engaging with the brand. Meanwhile, REI Co-Op members enjoy a standout benefit, a 365-day return window, making their loyalty investment feel even more rewarding.
Yet, even when strong return processes are in place, these benefits can often go under-marketed, leaving members unaware of the perks they have. This presents a major opportunity for brands willing to elevate their post-purchase experience as a loyalty differentiator.
Loyalty That Lasts Beyond the Purchase
Retailers have worked hard to optimize the shopping journey, from personalized recommendations to frictionless checkout. Post-purchase experiences (returns included) can be just as critical in shaping brand perception and long-term customer value.
The best return policies don’t just meet consumer expectations – they exceed them in ways that reinforce why being a loyal customer pays off. In an era where every touchpoint matters, it’s time to rethink the role of returns and recognize how they impact top of funnel purchasing behavior and how the correct approach can be a powerful extension of the loyalty experience.
Written By:
Marie DeLeo, Director, Strategic Consulting
As a Director of Strategic Consulting at Kobie, Marie plays a pivotal role in developing innovative loyalty programs for her clients grounded in data-driven insights. Marie has spent her career dedicated to creating consumer-centric marketing and loyalty experiences that not only enhance customer retention but also drive revenue through profitable customer behavior.
