6 Essential Value-Added Services in Retail

Amazon has set the bar for customer experience, leaving its competition struggling to match its range of value-added services.

A fast, seamless checkout experience and free shipping used to be the hooks that kept online shoppers coming back. While they are still critical, they are no longer enough. According to Salesforce, 66% of customers expect merchants to understand their desires and needs before they even start shopping.

6 value-added services to drive return visits and customer loyalty

Consumers seek value at every turn. Merchants who invest in the following seven value-added services are well-positioned to anticipate customer expectations, increase sales, and create brand advocates.

1. Frictionless returns: a value-added service customers expect

Customers certainly experience disappointment when a product fails to meet their expectations, but that disappointment could morph into frustration if the returns process is time-consuming and archaic.

According to a study from McKinsey, 76% of first-time consumers who had a frictionless returns experience would shop at a merchant again. Not surprisingly, 33% of repeat consumers would switch merchants if their returns experience was subpar.

Free returns are obviously the customer ideal, but it’s not always a practical policy for retailers. Many technology providers have found creative (and frictionless) ways to mitigate these losses without sacrificing customer delight.

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A technology platform called Loop helps Shopify merchants shift the customer conversation from “returns” to “exchanges.”

Loop incentivizes exchanges by giving the merchant the option of increasing the refund amount due the customer and encouraging the customer to redeem it right away. The customer will most likely buy a higher-priced item, helping alleviate some of the loss associated with the unwanted product.

2. Shipping protection: protect against loss, theft, or damage‍

The explosion of ecommerce means that more packages than ever are circulating between merchant, warehouse, delivery provider, and your front door. As more packages ship, so rises the number of accidents and thefts.

According to a 2020 C+R Research survey of 2,000 consumers, 43% of respondents reported a package theft in 2020, up from 36% in 2019. Merchants can combat this trend by offering shipping protection as a value-added service.

Unless the merchant offers shipping protection, they have no choice but to absorb the cost of shipping out a new item in the event of theft or damage during transit. If they refuse, then their brand reputation goes south as the customer switches merchants and tells their friends to avoid them at all costs.

Merchants work hard to optimize the customer experience, and shipping protection helps them ensure their customers receive their products.

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3. Personalized recommendations: keep the customer engaged

Shoppers want to feel like every element of the buying experience has them in mind.

According to Accenture, 44% of consumers were frustrated with companies that didn't provide personalized shopping experiences as a value-added service.

Merchants need access to customer data to offer these personalized experiences. Fortunately, a Deloitte survey has found that 79% of respondents would be willing to share their data if there were something in it for them.

Thanks to advances in machine learning, even smaller merchants can deploy personalized recommendations on their site. One provider, Recolize, allows merchants to install mobile-friendly recommendation carousels that integrate seamlessly with most site designs.

When one considers that customers who click on product recommendations are 5.5% more likely to convert than non-clicking customers, the value of this personalization becomes clear.

4. Live chat: offer a human touch

In brick-and-mortar retail environments, customers expect a friendly human to be available to answer their questions and quickly guide them toward a purchase.

In the virtual world, live chat can extend that human touch. When shoppers have the chance to interact with a human, they move deeper into the sales funnel.

Forrester reports that customers who chat with a company are 2.8 times more likely to buy, and even better, spend on average 10-15% more than other customers.

Zendesk remains one of the most robust live chat providers. Their system connects conversations from web, mobile and social apps in one interface, so merchants’ agents always have the information they need to address customer inquiries.

5. In-store offers: adding value to retailers in real time

Special in-store offers are a classic value-added service. With the aid of geolocation technology, it has become easier than ever for merchants to serve digital offers to customers when they are most primed to buy.

Digital in-store offers only work if customers opt to receive them, usually in the form of push notifications. While customers have become increasingly concerned about data privacy,

59% of consumers in the U.S. would permit a location-based retail service that alerted them to in-store offers, according to a 2018 Statista survey.

Mobile apps most commonly deliver these offer-containing push notifications. For example, the Starbucks app uses a customer’s approximate location and time zone to create personalized offers. A popular push notification is an invitation to a “Happy Hour,” where a two-for-one in-store promo is often in play. When the customer opens the message, they see a landing page explaining the promotion with directions to their nearest Starbucks store.

Merchants without their own mobile app can use third-party apps such as Google Pay or Apple Pay to deploy geo-targeted offers. Google Pay is now working with retailers such as Target and Safeway to push weekly deals to customers who are near or in those physical stores.

Merchants who use geo-targeted offers understand the difference between adding value and adding value when a customer is most likely to take advantage of it.

6. Loyalty programs: reward customers who spend more

Customers who purchase from a merchant once will not necessarily purchase from that same merchant again. Loyalty programs can aid in customer retention by using perks and incentives to reward customers for repeat buying.

Many loyalty programs are free to join. Others function more like subscriptions in which members pay an annual fee to unlock the best possible rewards. (Amazon Prime, anyone?) Many merchants give customers the option of choosing one or the other. 

Not surprisingly, paid loyalty programs tend to drive higher rates of repeat spending since customers are more invested in them.

A 2020 Statista survey of U.S. loyalty programs revealed that members of paid loyalty programs were 60% more likely to spend more on brands, compared to 30% enrolled in free programs. 

Like so many other value-added services, it is now easier than ever for smaller-to-medium-sized merchants to offer free and paid loyalty programs. Yotpo is a provider that integrates with a variety of ecommerce platforms ranging from Shopify to WooCommerce. It can deliver customized loyalty rewards based on points, amount of spend, number of purchases or number of referrals.

Loyalty programs can certainly drive customers to purchase more products, but the true test of customer loyalty is how merchants respond when accidents befall those products.

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Bonus: Product protection is the value-added service that keeps on giving‍

Imagine a customer redeeming a year’s worth of loyalty points on a diamond necklace, only to have the chain break when the cat accidentally grabs hold of it. A modern product protection plan can change a heartbreaking situation into something positive.

Customers want merchants to offer protection plans, because they want their investments safeguarded against any kind of loss.

Merchants who offer extended-warranty products see consumers’ intent to buy increase by 25% on average, according to Assurant.‍

Historically, though, the claims process was often arduous for the customer. Only certain products were suitable for coverage, and the customer’s claim would often be rejected by the insurer.

Modern product protection providers are succeeding where legacy insurers have failed. They have made it simple to buy a plan and initiate a claim as well as drive customers back to the merchant to purchase a replacement product.

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Extend: Modern product protection, done right‍

Extend is disrupting product protection by putting the customer first. 

We at Extend offer merchants tailored protection plans for products ranging from jewelry to auto parts. We also successfully process 98% of online claims in 90 seconds or less. Claims that are approved may be met with a promo code to redeem on a replacement product, or customers will be able to schedule an in-home or on-site repair.

Customers will breathe easier knowing that their products are protected. Merchants will celebrate when their customers return as a result of a superior customer experience. We see that customers who purchase a warranty at a given merchant repeat at a 4.5% higher average rate than customers who haven't purchased a warranty from that merchant.

The bottom line is that merchants who delay the implementation of value-added services like product protection risk higher costs down the road. A generous loyalty program might result in a customer purchasing a diamond ring, but if the customer has an issue with the ring resulting in a negative claims experience, the merchant could lose the customer it paid so much to acquire.