What’s data-driven returns?

Every return tells a story. Are you listening?

Data-driven returns go beyond just tracking what comes back.

It’s about using those returns to improve your business—understanding which products aren’t working, which customers are returning the most, and how you can prevent unnecessary returns in the future.

In short, it’s the difference between seeing returns as a cost and turning them into a strategic advantage.

Let’s break it down.

Product-level insights: What’s driving returns?

Returns aren’t random.

They often stem from specific product issues that affect the customer experience—like inconsistent sizing, unclear images, or quality concerns.

Pinpoint product pain points. By tracking return rates at a product level, our platform highlights exactly which items are causing the most friction and why.

For example, high returns on a specific pair of trousers may reveal a sizing issue that needs adjusting, or perhaps the product description doesn’t accurately set expectations.

Real-life example:

Nordic Nest saw a 40% return rate for a newly launched product, only to find that a misleading product image was the cause. Updating the image to better represent the product reduced returns dramatically.

This type of insight is valuable; research shows that improving images and adding detailed size guides can cut return rates by up to 22%.

By identifying specific drivers early, you’re equipped to make changes that not only lower return rates but also improve customer satisfaction and retention.

Customer-level insights: Who’s returning, and why?

Knowing which products are being returned is only half the battle. You also need to know who’s returning them. 

Our platform segments customers by location, demographics, and shopping habits, giving you insights into return behavior that you can act on.

Germany, for example, is known for having return rates up to 30% higher than the rest of Europe. 

Is it due to cultural preferences? Does your messaging miss the mark for that market? 

With data, you can tweak your approach—whether by improving product descriptions for that region or adjusting return policies to better fit local expectations.

• By targeting high-return markets like Germany with tailored policies, businesses have reduced their returns by as much as 15%.
• Research shows that understanding customer return behavior can increase profitability by 10-15% by allowing businesses to focus on high-value, low-return customers.

And it’s not just geography. 

Are first-time buyers returning more items than loyal customers? Are younger shoppers less satisfied with specific products? 

By understanding the who, you can adjust everything from your marketing to your product presentation, reducing returns where they hit hardest.

Profitability insights: Maximizing value from returns

Not every return is bad. In fact, some of your most profitable customers might be high returners.

Our platform provides unique profitability insights, showing you which customers deliver the most value—even if they return a lot. 

A high-returning customer who regularly spends big could still be incredibly valuable. 

Instead of focusing on their returns, you focus on keeping them coming back.

• A high-returning customer who spends frequently could still generate 25% more lifetime value compared to a low-returning customer who shops less often.
• Retailers who identify and focus on their most profitable customers—rather than just their return rates—can boost overall profits by up to 20%.

On the flip side, some customers with frequent returns may negatively impact your margins. 

Instead of incentivizing this behavior with free shipping or special promotional offers, you can adjust your strategy accordingly.

With data-driven insights, you can automate these decisions, ensuring these customers aren’t rewarded for behavior that hurts your bottom line. 

Automatically exclude high-returning, low-profit customers from free freight offers or discount campaigns to focus on the ones that matter most.

• Businesses that implement dynamic customer segmentation based on return behavior have reduced promotional waste by up to 15%, leading to higher profitability.

Using data to optimize returns

When you know exactly why products are coming back, who’s sending them, and how it impacts your profits, you can turn returns into an opportunity. 

Data-driven returns are your key to improving products, making smarter decisions, and keeping your most valuable customers happy.

• Companies using data-driven return strategies have reported reducing their return rates by 25%, while simultaneously increasing customer satisfaction and retention by 15%.
• The right return management system can save up to 40% in reverse logistics costs by minimizing unnecessary returns and streamlining the process.

Ready to see how your business stacks up? Use our Returns Checklist to see if you’re making the most out of your return data.