Immediate and Long‐Term Benefits of In‐Store Return Experience

Abstract

This study contributes to the understanding of customer relationship management by assessing how an in‐store customer return experience can influence customer exchange behavior and satisfaction during a return event, and customer repurchase behavior following a return event. Exchanges, satisfaction, and repurchases are potential customer relationship management outcomes that may contribute to customer lifetime value. We empirically examine these outcomes with respect to two store labor factors: salesperson competence and selling pressure. Using transactional data and 7921 customer satisfaction survey responses obtained from a jewelry retailer, we demonstrate an in‐store return experience may contribute to customer lifetime value more through future purchases than through immediate exchanges. We show convincing customers to exchange their returns may decrease their future purchases if customers are dissatisfied with their return experience. Our results suggest, in order to increase both exchanges and future purchases, retailers should improve the competence of employees who handle returns and abstain from using selling pressure during a return experience. We also conduct a counterfactual analysis to assess the impact on net sales of several return experience improvement initiatives. Overall, our analysis provides evidence that an in‐store return experience represents a significant opportunity for retailers when handled carefully.