How to Leverage Customer Collaboration to Offset Shipping Losses

What if you could turn lost and damaged packages into a profit center that improves customer LTV?


Tyler Douglas

It happens. The order you shipped to a customer gets lost or damaged while a carrier is transporting it. With peak season just around the corner, you can expect the frequency of this to increase 2-3x.

This scenario is sticky. Your customers don’t care whose fault it is – you get the blame.  The unfortunate reality is that you’re expected to replace the order on your own dime. As you already know, customer experience is everything, so you’ll end up doing it. But it comes at a steep financial cost.  

You already know that when a carrier loses or damages a package, you can submit a claim with them to recover the cost associated with it. But, without your customer actively working with you, it’s extremely difficult to win the money back.

Because of this, you may have even stopped attempting to file claims with carriers.  The result?  

1) You eat the cost.

2) Your customer has been jaded by a poor delivery experience.   

But what if I told you there’s a way to turn this liability into an opportunity? A chance to forge stronger relations with your customers while safeguarding your revenue.   

It all comes down to incentivizing your customer to be involved in the process with you. When you provide incentives to your customer to participate in the claims process, like a discount on their next purchase, you stand to gain more than just cost savings.  

Let’s look at an example.  Customer A says their order of $50 was damaged.You have two options:

1)   Replace it and don’t deal with filing a claim.Best case scenario?  You lost $50 +shipping costs and your customer isn’t upset.

2)   Replace it and offer your customer $25 off their next order if they work with you to file a claim with the carrier.  Best case scenario? You get the $50 +shipping costs back and your customer has $25 they’ll use to purchase from you again.

The result?  You just turned a cost center into a profit center!

Here’s How You Can Do It

1.    Replacement first: From the outset, let your customer know their order will be replaced. If the package is damaged, simply ask for a picture as evidence which will immediately result in you sending a replacement. If the package was lost, ask them to confirm they’ve checked their mailbox or other likely delivery places.  Be sure to make it clear you will be sending a replacement as soon as the answer.  

2.    Incentivization: Offer incentives such as discounts on future purchases, bonus points, or even cash rewards to encourage customers to actively participate in the claims process.  For example, if they submitted a picture of damages for the claim, offer them $25 in store credit.  If they’re willing to talk directly to a carrier and tell them they checked everywhere and the package was not delivered, offer them $30 off their next purchase if you win the claim.

3.    Create a Feedback Loop: Let your customers know where the claim stands and how their participation helped.  Make your customers feel like they are partnered with you on this process. When you win, tell them, and thank them for their participation.

The crux of eCommerce is the shipping and delivery experience.  Provide a great one and your customers will be loyal for life. Provide a bad one, and you put yourself at risk for being overtaken by competition with a better experience.

Cheers and happy shipping!

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