There are a few things every good marketer must know about customers: They feel pain when spending money, they enjoy simple customer experiences and most customers dislike making returns.
At first glance, this information seems to match up well. Humans are psychologically inclined to avoid loss, and the time it takes to complete a return might seem like more trouble than it’s worth. But after a while, we started thinking: If customers don’t like losing money, wouldn’t it be easier psychologically to make the return?
Dr. Kelley Wight, assistant professor of marketing at Indiana University, spoke with us about why customers hate the return process, why refunds don’t motivate some customers to act and what consumer psychology has to say about this behavior.
Customers are attached to their possessions
Consumers put a lot of effort into their decisions. And once they’ve made a choice, it’s hard to let it go.
“Consumers can really work against themselves when it comes to returns. Handling returns certainly doesn’t directly benefit firms — returns are a hassle for firms’ supply chains and aren’t good for profit. But even though it’s a benefit to consumers, and even though consumers are wanting to get rid of the item they’re returning, it can be hard for people to give up their own stuff,” Wight said.
Wight says this is called the Endowment Effect. It boils down to a simple idea: By something simply being theirs, a product is worth more to a person than when the same thing was sitting on the store shelf. This psychological ownership, in combination with the logistical hassle of returning products, likely makes it harder to get ourselves to actually return products.
A similar brain response occurs when people feel ownership over their financial possessions. Any sort of loss feels significantly more valuable than a perceived gain, making it less likely that consumers will work as hard to gain something as they will to prevent losing it.
“People psychologically experience losses and gains differently. Losing money (in this case, spending it) feels more painful than gaining the same amount feels good. In other words, people might like getting money, but they hate losing it even more. So gaining money, such as from a return, isn’t as motivating as not losing money,” said Wight.
Returns are seen as a hassle
If there’s anything customers value during their journey, it’s simplicity.
Easy shopping processes often mean that consumers can get their needs met faster, their problems fixed quicker and their desires filled sooner. Returns can be seen as a hiccup in that simple journey.
This is why some customers will simply skip the return. But even then, they have to make another decision: What’s going to happen to the item now?
To an onlooker, this might seem like an even bigger burden than the return process. But to the consumer themselves, it’s quite the opposite.
There are a couple of psychological reasons why:
1. Inaction is preferred over action
“Even though having something take up space in your closet might actually accumulate into more burden over time than the 15 minutes it would take to return it, that’s often not how we think about it,” said Wight.
2. People think they have more time than they do
“It’s easy to say that you’ll have time to deal with the unwanted clothes in your closet at some point in the future, but really, you likely won’t have any more time in the future than you do this week,” said Wight. “The future-you will still have to find time in the week to cook dinners, take the kids to school, go to doctor appointments, send off that important email, etc., just like you have to do this week.”
Types of returns
There are a number of ways customers can engage in the return process: directly return the product in store, ship online returns via a local post office or return through third-party services. Many customers find most of the options to be quite complicated, but online returns are the least favored.
“Online returns can feel more difficult for a few reasons. Of course, logistically, they usually are more of a hassle than in-store returns: You might have to print a return label, find a box to pack it in and then wait in line at the post office in addition to driving somewhere,” said Wight.
But there’s also a psychological barrier: Future money is perceived as less valuable than money right now.
“Online returns typically take longer to get the reward of your money being returned. They have to be shipped and processed before you get your money back, as opposed to in-store returns that often complete the entire return right at the customer service counter,” said Wight. “So online returns actually tend to be more work for what feels like less money (even though it isn’t), making the process seem less worthwhile to consumers.”
Customers are simple. They want their experiences to be easy and that includes purchases they want and ones they don’t.
