Shipping Insurance: The Post-Purchase Strategy That Improves Customer Experience

There is no greater disappointment than when something goes awry before you even get the product you ordered. Whether the package is lost, stolen, or damaged, it leaves a bad impression on the company you ordered from.  

Simply put, unsuccessful deliveries can put your business at risk. In fact, studies show that 32% of consumers are less likely to reorder after a failed or unsatisfactory delivery. Even when delays are beyond your control, some customers will still blame the supplier or retailer. That's a significant portion of potential repeat business lost!

What can you do to improve this experience? One simple solution is adding shipping insurance. Not only does it protect your business, but it also enhances your customers' post-purchase experience and gives them peace of mind.

So, let’s explore how shipping insurance can improve customer satisfaction and safeguard your business from the consequences of delivery mishaps.

What is the Post-Purchase Experience?

The post-purchase experience is the customer's interaction with a business after placing their order. Yet, it’s often one of the most overlooked aspects of building long-term customer relationships.

While marketing campaigns focus on attracting new customers or retaining existing ones, customer retention often offers far more value. And a great post-purchase experience is vital to that strategy.

Studies show that repeat customers are more profitable, with loyal customers spending 67% more on products than new ones. Plus, retaining customers requires fewer resources, making it a win for your business. And let’s not forget—happy, loyal customers often become advocates, bringing in new business through referrals!

What Does the Post-Purchase Experience Include?

Now that you have a clearer idea of the post-purchase experience let's dive into what it covers. 

The post-purchase experience begins once the order is placed. Depending on your process, it can include:

• Order confirmation: A prompt message confirming the order and providing its details
• Shipping and delivery updates: Notifications about shipping status and tracking information
• Packaging and unboxing experience: The presentation of the product when it arrives
• Product quality: How the product meets or exceeds the customer's expectations
• Customer support: The assistance provided after-sales
• Return and exchange policies: Processes for returns, exchanges, or refunds to make customers feel secure about their purchases
• Warranties or guarantees: The assurance of the product's performance
• Customer feedback, reviews, and rewards: The real experiences and perks customers have after purchasing

How to Evaluate a Post-Purchase Experience?

Having these processes in place doesn’t automatically ensure a positive post-purchase experience. They are often the critical moments where a customer's perception of your offerings can take a turn for the worse.

However, there’s always room for improvement. Plus, it’s an excellent opportunity to further evaluate and enhance your services. You can gain valuable insights with the following approaches:

• Send customer satisfaction surveys to gather feedback on their experience and identify improvement areas
• Use a Net Promoter Score (NPS) to measure how likely customers are to recommend your business
• Track repeat purchase rates to check how often your customers make additional purchases
• Evaluate delivery times and item conditions to assess how quickly items arrive and their condition upon arrival
• Monitor communication clarity and timeliness to evaluate the effectiveness of your delivery updates

By taking these proactive steps, you reassure your customers that their experience is valued and that you're committed to enhancing it. This approach fosters trust in your business, cultivates customer loyalty, and improves credibility.

How Does Shipping Insurance Help The Post-Purchase Experience?

Let’s face it: shipping mishaps can create a lot of anxiety for customers. Even with the excitement of a new purchase, those feelings can quickly be overshadowed by a flurry of “what if” questions. 

What if it doesn’t meet my expectations? What if it gets lost in transit? 

These thoughts can linger during the wait, and if that wait stretches longer than anticipated, anxiety grows. After all, customers have already invested their hard-earned money into their purchases.

Shipping insurance acts as a form of reassurance. While it may not completely eliminate anxiety, it certainly helps reduce it. It instills confidence in the brand or business customers are buying from, showing them that their interests are prioritized. 

Basically, it’s a service that reimburses senders for parcels due to:

• Lost shipments: If a package is lost during transit, shipping insurance typically compensates the sender for the value of the lost items.
• Damaged goods: If items are damaged during shipping, insurance can cover the costs of repair or replacement, depending on the policy.
• Theft: Shipping insurance may cover the lost items if a package is stolen after delivery.
• Non-delivery: If a package is marked as delivered but the recipient did not receive it, insurance can help recover costs.
• Miscalculated Value: Coverage can include reimbursement for items shipped at a higher value than initially declared.

Some carriers may not offer specific services, and reimbursements are typically based on the value of the parcel's goods and the associated shipping costs. Often, basic shipping insurance does not cover the following:

• Improper packaging: Insufficient or inappropriate packaging damage is often not covered.
• Excluded items: Depending on the policy, certain items, such as perishables, fragile items, or high-value goods, may not be covered.
• Delivery delays: Shipping insurance typically does not cover delays caused by weather, carrier issues, or other unforeseen events.
• Customer error: Mistakes made by the customer, such as incorrect addresses or missing information, are usually not covered.
• Acts of God: Natural disasters or other uncontrollable events that affect delivery may not be covered.

The Pros and Cons of Shipping Insurance

Some people may view insurance as a rip-off, but it shouldn’t be seen that way. In 2023 alone, package theft has cost consumers an astonishing $8 billion in lost merchandise. Moreover, a survey of 1,000 Americans revealed that a staggering 44% have experienced package theft at some point. 

Here are the advantages of offering shipping insurance:

Pros

• Peace of mind: A safety net for your shipped items provides financial protection against such losses. 

• Convenience: Did you know many insurance providers offer seamless integration with your Warehouse Management System (WMS) or Enterprise Resource Planning (ERP) software? It makes the whole process a breeze!

• Cost recovery: If things don’t go as planned and your items get lost or damaged, shipping insurance can help you recover those costs. It minimized the impact on your bottom line.

• Business credibility: Offering shipping insurance shows your customers that you care about their purchases. When they know you’re taking steps to protect their orders, it builds trust and confidence in your business.

• Coverage options: You can choose the right level of protection based on your needs and those of your customers. Whether high-value items or everyday goods, you can select a shipping insurance option that fits perfectly.

However, it’s also worth considering these drawbacks when integrating shipping insurance into your sales strategy:

Cons

• Additional costs: While shipping insurance can be a necessary expense, sometimes the cost of insurance is higher than the items themselves, leading many to opt out of this option.

• Complex claiming process: Filing a claim can be complicated as it requires documentation, which can be time-consuming.

• Exclusions and limitations: Not everything is covered by shipping insurance, and there might be some gaps in protection. This can leave both businesses and consumers feeling a bit uncertain in certain situations.

• Vague terms: Sometimes, the terms of shipping insurance can feel a bit overwhelming or confusing. That’s why reading the fine print carefully is essential to understand what’s covered and what isn’t. Nobody wants (unpleasant) surprises!

Create a Better Customer Experience with iDrive Logistics

No one wants their customers to walk away with a negative impression of their company. Unfortunately, shipping issues can arise, which can harm your reputation. Adding shipping insurance to some or all of your shipments can create a reliable safety net for yourself and your customers, helping mitigate potential risks.

However, when managing this strategy gets tedious, there’s a more straightforward solution: letting experts handle it for you.

At iDrive Logistics, we’re committed to helping you enhance your customer relationships through our expertise in eCommerce logistics. Having partnered with many brands and businesses, we’ve gained valuable experience that allows us to understand the ins and outs of shipping and fulfillment.

Want to know more about how we can support you? Connect with our team today!