If you are a ClickBank vendor with an exclusively digital offer, you may be experiencing higher return rates than you need to.
There’s a simple solution that can make your business operations easier and lower your refund and chargeback rates: pairing digital offers with physical products.
Vendors and publishers who rely on an affiliate network for the marketing and promotion of their products typically make the choice between creating a physical product (like a supplement) or a digital product (like an ebook).
While it’s common for physical products to be paired with digital products – think weight loss products being paired with downloadable at-home workout videos – it’s not as common for digital products to be paired with physical products.
However, digital offer owners may want to consider coupling their online-only product with a tangible product to help lower refund rates and increase customer satisfaction. Read on to find out how!
The Value of Physical Products
According to August Grebinski, Vice President at Mel Printing and physical product expert, the reasoning behind this is multi-faceted. I had a chance to talk with Mr. Grebinski about physical products and the best way to optimize digital offers while also mitigating return costs.
“First, physical products can’t be pirated,” he said. “Oftentimes with digital products, people will just download the video or PDF or whatever the product is, and then turn around 15 minutes later and return the product. Retailers are out of luck in situations like this because many bigger wholesalers, like Amazon, require that sellers accept returns on all products.”
Grebinski added, “Another reason return rates are lower with physical products is that, for the most part, people value physical products more than purely digital products. Physical products have a higher perceived value.”
Making Returns Harder with Physical Products
I think we all recognize that holding a physical product in our hands just inherently feels more “real” to our brains.
But aside from the perception of value, convenience is another huge factor – maybe bigger than we care to admit.
Let’s face it: people are lazy.
If someone makes a $15 purchase on a physical product and wants to return it, but has to go to the post office and pay for shipping, they probably won’t make the effort.
Small physical product purchases are often not returned because the customer doesn’t want to deal with it. With digital products, returns are much easier: No going to the post office, no paying for shipping.
So, your business can benefit from human nature: simply including a physical product can add a layer of inconvenience to the returns process!
The Data Behind the Physical Product Concept
There’s actual data to back up this idea. According to a case study from a Mel Printing client, adding a physical product to a digital offer can bring down return rates by as much as 6.4%.
The client participating in the case study offered both a physical and digital version of the same product. The digital product had a return rate of 8.7%, whereas the return rate for the physical product was only 2.3%.
Both versions contained the same content and, theoretically, the same informational value to the consumer. However, due to the ability to pirate the content, the lower perceived value, and the ease of return, return rates for the digital product were nearly 4 times higher.
Both versions of the product cost the same as well: consumers paid $15 for the physical or digital product. (Although customers who wanted to purchase the physical product paid an additional $5 in shipping.)
Ongoing Benefits of Physical Products Beyond Return Rates
There wasn’t just a substantial difference in return rates for the two product offerings – the case study also indicated that the average order value between those customers who ordered the physical version of the product versus those who ordered the digital version varied as well.
Customers who chose the digital product had an average order value of $25. However, the average order value for those who selected the physical product was 44% higher – meaning that those who purchased the physical product had an average order value around $39.
A similar pattern was present when the case study delved deeper into the lifetime value of customers. Those who chose the physical product would eventually return and spend 37% more than those who chose the digital.
Why Physical Products? Because People Like “Stuff!”
According to Grebinski, some of the reasoning behind this case study is that there is an inherent human attraction to tangible items.
“People just like stuff! At the end of the day, why do we all get bigger houses, more vehicles, newer phones? People like to have things. They always have,” said Grebinski.
“However, I see this changing today with the amount of time and money consumers spend on apps and gaming. Nowadays, customers are placing more value on how much entertainment they receive. So, the best way to appeal to today’s consumer is to do it both ways: by offering digital products in a physical form and physical products in a digital format.”
Grebinski’s analysis of perceived value echoes the findings of a study completed at Boston University’s Questrom School of Business. According to researchers Ozgun Atasoy and Carey M. Morewedge, people ascribed less value to digital than to physical versions of the exact same good.
“Research participants paid more for, were willing to pay more for, and were more likely to purchase physical goods than equivalent digital goods, including souvenir photographs, books (fiction and nonfiction), and films,” the study found.
“Participants valued physical goods more than digital goods, whether their value was elicited in an incentive compatible pay-what-you-want paradigm, with willingness to pay, or purchase intention. Greater capacity for physical than digital goods to garner an association with the self (i.e., psychological ownership) underlies the greater value ascribed to physical goods.”
Findings like this are not only helpful for the greater fields of marketing, psychology, and economics as a whole – they can also help empower entrepreneurs to optimize their product experience and deliver the most value possible to customers while mitigating return and chargeback rates.
Generations of Physical Goods
For over sixty years, Mel Printing has found a way to stay relevant in the market and create high quality physical goods that fit a multitude of client needs. From becoming FDA compliant to fulfill health and fitness product demands, to branding and developing a separate company to handle fulfillment orders, Mel Printing has kept up in a unique way.
This is especially true if you consider that, since the advent of the internet and tablets, there was speculation that physical books would become relics of a bygone era.
While human psychology played a factor in ensuring the success of Mel Printing, it came down to more than perceived value on a direct-to-consumer level. The success of Mel Printing was about the value they add in a B2B context.
“The great thing about Mel Printing and Print Bind Ship is that we work closely with our customers to find creative solutions. We don’t require large minimum order quantities. We want our customers to succeed; their success is our success,” said Grebinski.
“Not only are we a printer, but we’re a manufacturer and fulfillment company as well. We offer apparel fulfillment, DVD/multimedia fulfillment, and book printing, binding and shipping services… Businesses rarely understand the breadth of our services, and they have nothing to lose by consulting with us. We’ve seen the printing and fulfillment industry completely change over the decades. We have a ton of knowledge and experience to help both small and large enterprises alike.”
Add Value to Your Digital Offers With Physical Products
Grebinski offers a few approachable ways to add a physical component to your digital offer. One, he said, is to test a book offer. “Books – such as a workbook or a hardcover or an informational pamphlet – are a great way to test the market and price points,” he said.
“For example, not everyone can start off with 100,000 printed copies, so start off with 100 copies. Do a split test to see which sells better: the digital copy or the physical copy. This will also help you discover which price points work best. You’d be surprised. Sometimes the same product sells better priced at $39.99 than at $29.99.”
Another way to add a physical good to your offer?
Or, as famed fictional office manager Michael Scott would summarize it: “Stuff We All Get!”
According to Grebinski, sending swag is a trusted path to customer loyalty and adding perceived value to digital offers.
“One way I see brands build customer loyalty, especially in health and fitness, is by sending swag along with their customer orders. Including a branded sticker or T-shirt or wristband along with a product order might subtly influence purchasing, but moreso, it’s free advertising!”
Ready to Try Digital Offers With Physical Products?
For those with digital-only offers that are successful, it may seem like there’s nothing to gain by adding a physical component. Grebinski disagrees.
“If you’re selling a digital product, you only stand to gain by having a conversation with us about it. You are already successful – why not try capitalizing on it?”
For those with digital offers who are struggling to get off the ground or those with high chargeback or refund rates, the solution you may be looking for could be a physical product. It couldn’t be easier to get started – this is how to add a physical product to ClickBank!
Whether it’s a flash drive containing the downloads sent in highly designed packaging or a free T-shirt with every order, there’s something for everyone who is looking to capitalize on human nature and the economics of perceived physical value. Give it a try!
To see more about reducing returns on digital products, check out ClickBank’s podcast interview with August Grebinski at Print Bind Ship!