How do I create the best return policy for my business?
While you may try and act like - or pray - returns don’t exist, the reality is that returns are imperative to your business’s customer service strategy.
Without a clear and consistent return policy, you’re opening your business up to a world of irate customers, chargebacks, and hindered growth. By establishing a fair return policy, you are showing your customers that you truly care about your relationship with them and not just about making money.
It shows that you stand by your product or service and inspires trust and confidence in your brand. And if your business is online, your return policy is usually a make or break. A recent survey by UPS found that 63% of consumers check the return policy before making an online purchase and 95% of consumers will make another purchase if their return experience was positive.
Not to mention, a poor return policy has the potential to significantly increase your rate of chargebacks. If your customers can’t return unwanted products to you, they will likely go straight to their bank and initiate a dispute. In fact, 81% of consumers admit to initiating chargebacks because it's more convenient than contacting the merchant.
For more information on chargebacks and why they matter, click here.
So how do you ensure you are getting the most out of your return policy?
10 Best Practices When Creating Your Return Policy
1. Make sure it’s easy to read.
Using complex words that are difficult to understand is not only going to confuse your customer but it will likely create unnecessary questions and feelings of uncertainty - unless your customer has a dictionary handy. For all the non-lawyers that are potential customers, it is best to stay away from the legal jargon and provide a clear summary of your return process. This will ensure everyone is on the same page and everyone comprehends their roles and responsibilities in your policy.
2. Outline a reasonable time period.
It is best to stipulate the exact amount of time while being as flexible as possible; whether it be 30, 60, 90, or 365 day return periods. But what many businesses are realizing is that by extending their return window, they are actually getting fewer returns. Offering a reasonable amount of time to try your product not only shows you trust in your product but also shows that you value your customers’ time and money.Furthermore, your return policy can be a unique selling advantage and can help differentiate you from your competitors. Companies like Zappos with 365 day return periods have found that very minimal customers are actually taking advantage of their longer than normal return time frame which has translated into more brand evangelists and fewer returns.
3. Decide whether the return must be accompanied by a proof of purchase.
Mandatory presentation of the original receipt in some unique niche businesses may not be necessary. But, for most merchants, checking a sales receipt is more than just a good idea. It allows you to verify if the return is within the time frame, if the merchandise is yours to begin with, and how much the customer paid for it.
The last thing you want is to refund the full retail price of a product that was purchased on sale or, even worse, refund a product that your customer didn’t even buy from your shop, but from your competition. These are some examples of return fraud - which is a rising epidemic in Canada - and prohibiting a refund without the original receipt can help prevent these scenarios from ever happening.
4. Specify the type of refund your customers will receive.
It’s important to state how your customer is going to be reimbursed for their refund. Will they be receiving cash, store credit, or are your products or services only eligible for exchange?
Although most customers will want a refund of their money, there are many ways to incentivize your customers to keep their money in your store. Some ways to do this is by offering free return shipping or more money for the return if they choose to accept store credit.
But, you must remember to always refund back onto the same payment method as was purchased; never give cash back for something purchased on credit card. This can help deter any fraudulent returns from taking place in your store.
5. Determine how your customers should return your merchandise.
Making your return process a complicated one will not reduce the amount of returns you get. Instead, it will increase your chargeback rate and label you as a business with a poor return policy.
Give your customers enough time, if the process can take days, make sure your customers are fully aware. This is especially true in e-commerce businesses where return policies are integral to a customer’s purchasing decision and return shipping can be expensive and troublesome.
Whether they have to fill out a form, call an 800 number, or visit a nearby store, make sure the return procedure is clear to the general public. If you are a multichannel business, allowing a return to a nearby store can save your customers time and confusion and save you from a potential chargeback.
Whatever you decide, make sure you are doing everything in your power to satisfy your customers and apologize for any inconveniences. A study by UPS found that 48% of customers would shop more at stores that offer hassle-free returns.
6. Specify the acceptable return condition of the product.
It is critical that you specify the state of the item you’ll accept for return. If the tag or box of the merchandise must also be in good condition, make sure you clearly define this in your return policy. Using words like “unused” or “unopened” can help prevent any confusion; just make sure they aren’t hidden in the fine print.
If the product is defective, make sure to outline what that means and what the process is for these items. If your product has a warranty that covers defective goods, make sure to specify the warranty process in your return policy.
The last thing you want is your customer requesting a chargeback or writing a bad review because you didn’t specify the condition in which you were willing to accept returns. And even if your customer doesn’t pursue those options, a long line-up or telephone queue of irate customers is stressful and just bad for business. So, avoid these situations at all costs.
7. Address any extra fees associated with a return.
Customers are already upset they have to pay for shipping costs, and if they get hit with an additional return shipping fee that they weren’t informed about, rest assured, you’re going to hear about it. Being transparent and upfront about any and all return fees, whether it’s restocking, handling, or shipping fees, is imperative to maintaining a loyal customer base.
One study in the Journal of Marketing found that 67% of online consumers said they would purchase more if returns were free and found that those who received free shipping on returns increased buying over the following 2 years by 357%.
So, be straightforward, and guarantee there’s no hidden fees.
8. Publicize, Publicize, Publicize!
Hiding your return policy from your customers is not going to deter them from taking advantage of it, it’s only going to make your customers demand a full refund or, even worse, initiate a chargeback from their bank. The best thing to do is publicize your return policy everywhere. Make it visible in stores and have your customers sign their names next to the return policy on sales receipts, your customers will appreciate it.
If you have an online store, make it easy to find on your website and make it clear during checkout. About 25% of online shoppers will abandon their shopping cart if the return policy is not clearly stated. It’s also beneficial to include your e-commerce return policy in the confirmation emails after purchase.
9. Ensure your staff is fully equipped and trained for returns.
Even if you plaster your return policy all over your website and all over the counter of your store, your employees could be translating the wrong information - or no information - to your customers. It’s important your staff know your return policy inside and out and that the information they share is accurate and consistent. Regardless of whether your customer read your policy or not, if your staff tells them different, you’re likely going to have to honor it.
When it comes to processing returns, if your employees accept a damaged product or don’t properly check for proof of purchase, it can cost your business an arm and a leg. Training your staff on how to properly process a return, and what to do in the event of having a difficult conversation with an irate customer, should be an integral and mandatory part of onboarding a new employee. As well, you and your store managers should be reviewing returns daily to stay on top of inventory and sales.
10. Prevent returns as much as possible.
We all know returns are inevitable. However, there are many ways to prevent a return from even occurring. Most retail clothing websites will provide accurate sizing charts during the buying process. This will prevent your customers from returning clothing that didn’t end up fitting right as not all clothing fits the same. If you aren’t a clothing website, remembering to upload accurate descriptions, dimensions and weight of your product can not only prevent a return but a chargeback as well.
As for your brick and mortar store, your return rate can be drastically reduced if your staff is fully trained in your sales process. Ensuring they are knowledgeable on the ins and outs of all your products and services can prevent your customers from returning a product that wasn’t what they expected, or the wrong product altogether.
It’s also just as important to train your staff to not force sell your customers through any purchases they do not want. Coaching them on a needs-based sales process can prevent a return by tailoring your products and services to your customers’ needs.
The top 5 reasons for product returns are:
- incorrect product purchased
- product no longer needed
- product did not match description
- product did not meet expectations
- customer unfamiliar with product.
If the same product is continuously being returned, find out why and adjust. You can learn a lot about your business by analyzing your returns. And don’t forget to try and save the sale; don’t just process a refund without getting as much feedback as possible. You might be able to resolve their issue and save yourself the time and money.
