In 2015, Heidi Zak had created the perfect bra. She just couldn’t get women to try it on.
Frustrated with the bounty of ill-fitting bras that dominated the lingerie market, Zak left her job at Google and founded ThirdLove in 2013. The first bra the online-only company offered — the 24/7 Classic T-Shirt Bra — emerged out of two years of market research and thousands of fit tests. We knew that if someone put on the bra, she loved it, says Zak. But there’s this fear with purchasing the unknown, the unknown brand, especially one that’s making a claim that may be hard to believe, a bra so comfortable you might not want to take it off, she says. So we brainstormed: How can we get women to just try the product?
And customers have to stick around after that initial purchase. Thinking about signing up for Blue Apron? You can get three meals for free before committing to the meal delivery service. But Blue Apron has struggled to retain customers long enough — at least six months — to earn back their high cost of customer acquisition, which has delayed the company’s push to profitability.
But try before buying isn’t going anywhere. In June, Amazon announced Prime Wardrobe, a service that brings the fitting room to you, amplified as only Amazon can, with more than a million eligible items, a seven-day try-on window, and no upfront payment (well, except for that annual Prime membership fee).
The answer: Give it to them — for free — for 30 days. With ThirdLove’s Try Before Buying program, for the cost of shipping ($2.99), women can order a bra, take off the tags, and wear and wash it for 30 days before deciding whether to pay $68 to keep it for good. We’re saying, that’s how much we believe in our product, Zak says. Women listened. Today, according to ThirdLove, 76 percent of Classic 24/7 Bras are purchased by customers coming in through Try Before Buying.
According to a report by the National Retail Federation, on average, 8 percent of merchandise purchased is returned, representing more than $260 billion in lost sales in 2015. Returns have traditionally been seen as a costly problem for retailers to avoid. But increasingly, many companies, particularly direct-to-consumer and online-only retailers, are putting their return policies front and center, as an integral part of their company identity and our shopping experience.
Order a pair of prescription glasses from Warby Parker and sport them for 30 no-questions-asked days before sending them back. Buy a mattress from Casper and you can sleep on it for 100 nights — three months! — before asking the company to whisk it away for a full refund. Pull on a pair of Athleta’s Chaturanga yoga tights and go for a run (or, you know, on a brisk trip to the supermarket). Do they ride up or sag in all the wrong places? Take those leggings back for a full refund under the company’s Give It A Workout Guarantee. Most audaciously, you can buy a pair of underwear from MeUndies, wear them, and send ’em back if you don’t like them. (Actually, don’t send them back: Those are the ones you get to keep, says T.J. Stein, director of customer experience. The company will still issue a full refund or exchange.)
Founded in 2012, the online-only MeUndies offers ridiculously comfortable underwear made from soft and sustainably sourced fabrics. That first [purchase] experience is really critical for us, says Stein. How do we allow customers to purchase something without the apprehension of feeling like [they] can’t return or exchange for a different size or style?
MeUndies offers a 100 percent satisfaction guarantee, which gives customers 90 days to decide if they like their underwear. (If three months seems like a long time to contemplate an undergarment, consider that Zappos gives its customers 365 days to return anything.) The satisfaction guarantee is a big acquisition tool for us, Stein says. He says about 20 percent of MeUndies customers cite the return policy as a primary reason for shopping with the company. Businesses should evaluate their return and exchange programs as a customer acquisition tool, he says.
A return policy is basically a marketing campaign. ThirdLove’s Try Before Buying and Athleta’s Give It a Workout Guarantee are pithy slogans, easily understandable as a flash in a Facebook feed. It’s about having something to talk to your customers about, says Zak. Especially with digital marketing, it’s a moment in time. You have a second to get someone’s attention.
The resources required to secure someone’s attention — and to transform that attention into action — are referred to as the cost of customer acquisition. (For example, if a company spends $100 on marketing in a year to acquire 10 customers, their cost of customer acquisition is $10.) For profitability [on an order], it has to do with cost of goods sold, but it’s also about your operational costs — fulfilling of the order, the shipping cost, processing, says Zak. If the cost of customer acquisition is less than your profit, then you’re profitable on your first order — and we are.
We of the internet era are a discerning and fickle buying public; for many companies, it’s cheaper to give us a product — a bra, a pair of underwear, shoes — than it is to reacquire us as a customer after we’ve been left dissatisfied by a transaction or interaction.
Kate Flannery, the director of public relations for Athleta, says that the company’s Give It a Workout guarantee inspires loyalty and confidence [in] our customers. She wants the clothes to deliver on style, but she needs them to work for her. If they don’t, we want her to come back and find something that does.
But a generous return policy is only profitable for a company if most customers don’t actually use it — which means offering a product that people want to keep. In lowering the barrier to entry, a generous return policy can also play into the perception that a product must be worth keeping. (Think about companies that have strict return policies, like Forever 21, which, confusingly, offers refunds only for online purchases returned by mail within 30 days of the ship date, and store credit for everything else. Often, these companies aren’t associated with high-quality, long-lasting products — or excellent customer service.)
You have to have the level of service and level of product that can support … these type of return policies, says Zak. If 50 percent of your customers are returning the product, you’re not going to have a longterm sustainable business. Zak says that between 75 and 80 percent of ThirdLove customers keep the bras they order. Stein says that the return rate for MeUndies falls very well below the industry standard return rate of 8 percent for web-only retail. (Flannery declined to share the merchandise return rate at Athleta.)
Of course, where there are free returns, there are returners testing the limits. Pretty much everything you can possibly imagine — and I’ll let your imagination run wild — has been asked of us, says Stein of MeUndies. One distraught customer wrote in to say that she loved her new underwear but that she only got to wear them twice. My dog ate MeUndies!!! she wrote.
