Mar 10, 2023
Kelli is the senior content strategist for Order Protection.
When you think of package protection, what comes to mind? Maybe you think it’s an unnecessary add-on, or just another expense.
Imagine, if you will, a scenario that is all-too-common in the eCommerce space: a customer reaches out to your support team after making a purchase. Their package was lost in transit. They’re upset that they never received the item they paid for, but this was the fault of the delivery courier—not your brand. Still, you have an unhappy customer who now associates this experience with your brand. How do you proceed?
Let’s try a Choose Your Own Adventure approach:
A. You tell them, sorry, but you can’t control the way the delivery courier operates. You then suggest they contact customer support for the delivery courier and file a claim through them.
B. You apologize for the inconvenience and offer to refund their order.
C. You apologize for the inconvenience and offer to reship a new order at no cost to them.
Now let’s explore how each scenario might play out:
The customer is not happy about being redirected to another customer support team (where they may not even receive help), and they’re unsatisfied with the experience they had with your team. They leave a negative review of your brand online and decide they will not be making any future purchases with your company. They also share the story with friends and family, telling them to only shop with your brand at their own risk.
While you’re not out the money from this particular sale, you’re most likely not going to see any future sales from this customer—or the people they told. Your brand reputation also took a bit of a hit with the negative public review.
The customer is a bit deflated about never getting the product they wanted, but at least they got their money back. On the brand side, you’re out the money from the sale, shipping costs, the product itself, and time spent on customer support. This will hopefully still count as a win for brand loyalty in the customer’s eyes, as long as the resolution was provided quickly and didn’t require a lot of effort on their part.
The customer is extremely happy with the level of support they received from your team. They’re still getting the item they wanted without having to pay for it a second time. This likely earned your company some brand loyalty points, but at a pretty great cost to your bottom line. Now you’re out two products with just one sale, plus shipping materials and cost, and time spent on the customer support interaction.
None of those scenarios is a slam dunk for the brand. They’re either taking a hit on customer satisfaction, or on their own wallets by eating the costs of replacing or refunding the lost item. It’s a tricky line to toe, especially when you consider that many of the issues that can arise during the shipping process are unpredictable, unavoidable, or both, yet it’s still the brand’s reputation on the line.
That’s where package protection comes in.
What is package protection?
Package protection is a service that protects against financial loss in the event that a package is damaged, lost, or stolen before reaching the end customer. It goes by many names, so if you’ve come across terms like shipping insurance, shipping protection, parcel protection, buyer protection, package insurance, or other related terms, it’s likely referring to the same service offering.
As we mentioned earlier, issues that arise during the shipping process can’t always be predicted or avoided, making package protection one of the simplest and most effective ways to mitigate the impacts any of those problems may have on a brand’s bottom line. It’s also one of the best ways to ensure your customers have a better post-purchase experience.
In the example from the beginning of this article, the customer’s package was lost in transit. Neither the brand nor the customer could have prevented this issue from happening. But, if the brand had offered package protection and the customer had taken advantage of that service, we’d be looking at a much different outcome than any of the scenarios described above.
We now present you with:
Scenario D (Package protection)
A customer’s package is lost in transit. They’re frustrated and annoyed, but there’s a silver lining: the store they purchased from offered package protection. The customer opted in to the package protection for a small additional fee as part of their order. You see, they’ve learned their lesson many times over thanks to unreliable delivery courier services and porch pirates in their neighborhood.
Upon discovering their package was indeed lost, the customer dug up their order confirmation email to find the link where they could file a claim if they had any issues with their order. Since they clicked the link from their email, they didn’t even have to copy and paste their order number for the claims process; it was automatically populated. Nice.
Less than five minutes after starting the whole process, the customer was finished submitting their claim. They were able to select “package lost in transit” as the reason for their claim, which is definitely a covered issue within the package protection policy. They were also able to indicate their preferred solution which, in this case, was a reshipment of their lost item.
Just 30 minutes later, a customer service rep reached out to the customer via text to let them know they reviewed the claim, approved it, and had already processed the reshipment. The customer received the resolution they wanted without it even taking up an hour of their day. Plus, the process was convenient, and the communication and support they received was personalized, friendly, and efficient.
On the brand side, the store partnered with a package protection company to handle the entire claims process. So in addition to not having to devote customer support hours to the interaction, they were also covered for the loss.
This is what we in the biz call a win/win/win.
What are the risks of not offering package protection?
Leaving anything to chance in the business world is an unnecessary risk. Especially concerning issues where simple solutions exist to mitigate that risk. We’ve already covered many of the risks brands encounter when they don’t offer package protection, but we’ll run through them again here.
Negative impact to the customer experience
For today’s consumers, the shopping experience has evolved beyond just a transaction. They expect an engaging, personalized experience. They want fewer touchpoints, more efficiency, and an overall experience that feels like it was built exclusively for them.
When brands don’t provide services that aid in the post-purchase journey, or, maybe even worse yet, they offer services that are just poorly designed and executed, consumers will simply take their dollars elsewhere. Gorgias reported that 96% of customers that endured a high-effort customer experience lost their loyalty to that brand.
So it’s important to not only offer services like package protection, but to ensure that experience is low-effort and efficient for the consumer. The situation we described above in Scenario D is a great example: a quick and easy way to file claims, plus quick, efficient, and personalized responses from a customer service rep throughout the claim process.
Decreased brand loyalty and customer retention
The post-purchase experience is crucial to customer loyalty and retention. How much effort a brand devotes to this part of the customer journey plays a huge role in creating that ongoing, enriched relationship with their customers.
When brands don’t provide solutions to the kinds of problems that can arise post-purchase—such as shipping issues—the customer interprets that as: this company doesn’t care about me; they only care about the sale. Which, to be fair, isn’t a stretch. If a brand only provides exceptional customer service up until the point of sale, and nothing beyond, what else is a consumer supposed to think?
Financial impact to a brand’s bottom line
Aside from the costs of replacing lost, damaged, or stolen packages, the impact of losing repeat customers is another major blow to a brand’s financial bottom line.
Not only are existing customers more likely to buy from your store than new customers, but they’re probably going to spend more, too. According to research from Gorgias, repeat customers generate 300% more revenue than first-time buyers. That’s…a big difference. And with those repeat purchases come higher order values. In the apparel industry, a customer’s fifth purchase is 40% larger than the first.
So while some brands may think, “big deal, so a customer isn’t talking us up on social media or leaving great reviews. At least we got the sale,” it goes a lot deeper than that. Many decimal points deeper.
And, in addition to bringing in higher order values and more frequent purchases, keeping your existing customers happy is important for another reason. Acquiring new customers is expensive. Compared to five years ago, new customer acquisition costs are up nearly 60%.
Phew. So that package protection offering is starting to look a lot more like a must-have, right? Because it’s not just protecting a package. It’s protecting your brand reputation and brand loyalty, which are both huge factors in business success.
Why package protection is important for brands
Hopefully by now, you’re starting to catch on. A package protection offering is important to brands because it can help:
Improve customer loyalty/retention
Protect your bottom line
Protect your brand’s reputation
But here’s a new one we haven’t touched on yet:
Offering package protection can add a new revenue stream for your business
Repeat customers can help boost profits with higher order values and more frequent purchases, but package and shipping protection programs will often introduce new revenue. With Order Protection, for example, brands that work with us are part of our revenue share program. Brands receive a percentage of the premiums collected by customers who opt-in to package protection. So in addition to all of the ways this type of service saves money for brands, it also opens the door to new revenue streams that didn’t exist before.
Why package protection is important for consumers
Again, it should be pretty clear at this point that offering package protection can make or break a consumer’s experience with your brand. But we’ll take a look at two big reasons why package protection is an important offering for consumers.
Peace of mind
The big one here is the relief that comes with package protection. Customers can rest easy knowing that even if something does happen to their package before it gets to them, they’re covered. With 260 million packages lost to porch pirates alone in the last year, consumers want to feel confident that if they can’t be right there to receive their package as soon as it’s delivered, they’re covered in the event that a thief strikes their neighborhood.
With rising inflation, consumers are a little more careful with their hard-earned money, and the last thing they want to do is make a purchase with a brand that doesn’t have their customers’ backs. When you show customers you care with a service like package protection, they’re not only more likely to buy from you now and in the future, but they’ll likely tell someone they know about the great experience they had with your brand.
Get package protection for your brand
If you made it this far, bravo. Hopefully we were able to show you that the simple offering of package protection is, in fact, not so simple after all. At least, not in the sense of how it can impact your business.
If you’re not convinced, let’s talk. Reach out to schedule a customized demo to see how Order Protection is helping brands retain happier customers, protect their reputation, and bring in more profits than ever before.