Retail Growth

The Complete Guide to Value-Added Services

Victoria Fryer
April 25, 2022

Ecommerce brands know how important it is to invest in the purchase funnel and conversion optimization, but the post-purchase experience too often gets left behind. 

Today’s environment is too competitive to forget about your customers after the sale. Long-term customer relationships aren’t made, they’re nurtured — and solving customer problems downstream builds affinity and loyalty. 

One way to do that is through value-added services like:

  • Live chat
  • Personalized recommendations
  • Loyalty programs
  • Product protection
  • Frictionless returns
  • Special offers
  • Deferred payments
  • Shipping insurance 
  • Customer reviews

Let’s look at each of these value-added services and see how they’re being used today.

What are Value-Added Services? 

The term “value-added service” refers to a feature or service that adds above-and-beyond value to the shopping experience. 

The top merchants are dominating the market by continuing to innovate on the experience they provide. Two-day shipping was almost unheard of before Amazon Prime. Today more than 90% of consumers see two- to three-day delivery as a baseline. 

But Amazon is just one of the many top enterprise retailers leveraging value-added services to drive return purchasers — and two-day shipping was just one of the first value-added services that, once novel, is table stakes today.

Let’s look closer at each value-added service and its unique benefits.

Live chat 

In-store retail environments lended themselves well to personal, human customer service — but online, it’s a little more challenging. Live chat can add a human touch onto your ecommerce site. 

Plus, customers chatting with your company are highly engaged.

On average they’re up to 2.8x more likely to buy, and they spend 10–15% more than other customers, so it’s in your best interest to be there for them.

Main benefits of live chat: 

  • Higher conversion rates
  • Increased revenue

Try live chat if you have a large portfolio of products that is difficult for customers to navigate, or if your support agents field frequent questions that are too complex for chatbot logic or FAQs. Another great use case for live chat is if you serve customer needs that could be time-sensitive. 

Example: Rent the Runway

Rent the Runway was built on dressing women for special occasions. A last-minute wardrobe malfunction before a once-in-a-lifetime event can make or break a customer’s brand affinity. Live chat enables customers to get real-time assistance from live RTR agents, and in return, customers know they’ll be taken care of for their most special events.

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Loyalty programs

Loyalty programs reward customers for repeat purchases, with the goal of keeping them in your ecosystem and connected to your brand. They have a wide range of implementations, from simple to complex, and from free to fee-based. But they’re not just your business doing your customers a favor.  

Loyalty programs provide a treasure trove of first-party data about your most loyal customers. Nearly three in four consumers say they’re willing to give up some of their data for better pricing, discounts, or offers.

The key to a loyalty program that drives customer satisfaction while creating value for your business is finding the right balance between give and take. Customers give their data for what they’ll get in return — the bigger the ask, the bigger the reward should be.

Main benefits of loyalty programs: 

  • Increase revenue
  • Drive repeat purchases

Example: Amazon Prime

On the more complex end of the loyalty program spectrum is Amazon Prime, which costs an annual fee to join but unlocks numerous benefits — from free two-day shipping to an entire video and music streaming service.

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Personalization

Shoppers want to feel as though the shopping experience is tailored to their needs. 

One popular, relatively simple way to add personalization to your shopping experience is to use customer purchase data to recommend complementary or similar products. 

Data shows that customers who click on product recommendations are 5.5% more likely to convert, so this relatively simple element of personalization could really pay off.

Main benefits of personalization:

  • Improve conversion rates
  • Increase revenue
  • Drive repeat purchases

If you are in ecommerce, you should be working toward some level of personalization, if you have not already. As merchants become more sophisticated at gaining and leveraging their first-party customer data, personalization is more likely to become table stakes. 

Example: Sephora

Sephora is one of the gold standards in ecommerce personalization. As Sailthru points out, “The Sephora app, email marketing program and website deliver their own expertly personalized experiences. They’re also integrated with each other (and the in-store experience), creating a fully consistent experience, the main driver of customer satisfaction.”

Customer reviews

To grasp the importance of customer reviews (among other things), one only has to recall the string of stories in 2016 about Amazon shoppers who mistakenly purchased furniture sized for dollhouses instead of full-sized pieces.

92% of customers factor reviews and testimonials into their purchasing decision.

Surfacing customer reviews on your ecommerce site can help a customer feel more confident about making purchases. 

Main benefits of customer reviews:

  • Increase conversion rates

Customer reviews are essential for almost any business, but pay particular attention if you’re still building brand trust, or if you’re selling beauty products, apparel, or other goods that may look, feel, or fit differently than expected.

Example: NewAir

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Frictionless returns

It’s already frustrating to receive an incorrect product or a product that fails to meet expectations. Many of the same kinds of issues that necessitate customer reviews make frictionless returns important. Apparel might not fit as expected, colors may look different in real life, etc. And that frustration will compound if the returns process isn’t customer-friendly. 

A frictionless returns process can increase customer loyalty, as 76% of first-time consumers who had a simple returns experience say they’d shop with that merchant again. 

Main benefits of frictionless returns: 

  • Drive repeat purchases
  • Increase customer satisfaction

Returns become particularly important in things like apparel and furniture, when the way things fit really can’t be fully ascertained until the customer sees it in real life. And for mattresses, which we’ll see below — without the ability to return them without hassle, they would have a more difficult time getting people to buy sight unseen.

Example: WinkBed

Deferred payments

Today’s uncertain economic environment, as well as a large group of younger buyers eschewing credit cards, means that cash is king. That’s one reason that offering your shoppers the option to finance at the point of sale — online and in-store — with a buy now, pay later solution can lead to more purchases. 

In 2020 and 2021 the user base for BNPL services increased by 85% — and that was in just 15 months.

There is a clear consumer demand for this service.

Main benefits of buy now, pay later: 

  • Improve conversion rates
  • Increase revenue

Allowing people to pay over time gives them flexibility to keep cash on hand and better manage their credit. Try deferred payments if you sell big-ticket items like furniture or luxury goods.

Example: Modloft

Modloft works with Affirm to give more customers access without the high interest rates that come with credit cards.

Shipping protection

More ecommerce deliveries in 2020 led to a rise in package theft: 43% of respondents reported a package theft, up from 36% in 2019. And that’s just one thing that can go wrong with deliveries — particularly with today’s uncertain supply chain. Shipping protection is a value-added service that can help make sure your customers receive their products. 

Benefits: 

  • Customer satisfaction 
  • Drive repeat purchases

Try shipping protection for particularly valuable products or things with high theft rates — and for items that are collectible or one-of-a-kind, shipping protection is table stakes.

Product protection

A modern product protection plan can turn a frustrating experience into a positive one. According to Assurant, merchants who offer product protection see purchase intent increase by an average of 25%. But historically, the claims process has been particularly arduous for the customer, leaving them disappointed with their experience. 

Based on internal Extend data, customers who buy protection plans have a 4.5% repeat purchase rate and account for, on average, a 2% increase in incremental revenue.

But one of the biggest benefits is the one only product protection provides — it keeps customers using your products. 

Main benefits of product protection:

  • Improve conversion rates
  • Increase revenue
  • Increase customer satisfaction
  • Drive repeat purchases
  • Keep customers using your products

Full-stack product protection is a great service for both retailers and manufacturers who want to give their customers peace of mind, drive pure profit, and create long term advocates by keeping customers in their ecosystem. 

Example: Backcountry

For Todd Anderson, Director - Bike and Powersports Gearheads at Backcountry, customer satisfaction isn’t just a business goal — it’s a passion. He wants customers getting after their next adventure without worrying about the cost of replacing damaged gear. His commitment to putting customers first is a value he and Backcountry weren’t willing to compromise on in a product protection solution.

“There are so many businesses for customers to choose from and if you don’t take care of your customers, they’re really quick to write a business off and move on to the next one,” Todd said, emphasizing how critical it was for Backcountry to find a company whose values aligned with their own.

From the outset, Extend demonstrated a sense of dedication to Backcountry that set itself apart from other solutions they were considering. While Todd was impressed with the collective experience of Extend’s seasoned leadership, it was the human, personal support and communication he received from the team at Extend that really struck him. From the Merchant Services team to Extend’s own CEO, Woody Levin, the team took time to understand Backcountry’s needs and build a solution that embodied the customer-first ethos.

As Todd put it, “Extend didn’t just talk the talk — they walked the walk.”

Victoria Fryer
Victoria Fryer leads the content marketing team at Extend. Previously, she managed content at Contacto and BigCommerce.

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