Why Product Returns Aren’t the Enemy
Retail is unique in that the scope of a business’s success (or failure) is never entirely certain. While a store may have “out of this world” sales numbers in November and December, there’s nothing stopping those numbers from crashing down come the post-holiday return season.
To create a level of predictability, some retailers have adopted more restrictive return policies. The thinking goes, "We can guarantee a certain level of revenue for the quarter by severely limiting returns." Unfortunately, this thinking puts the cart before the horse.
This fall, Promocodes.com conducted a survey to determine what, if any, impact product return policies have on consumer decision making. We found that more than half of shoppers avoided retailers with strict return policies. In other words, a bad return policy precluded any possible sale for a majority of the population. Any hypothetical revenue spared by a strict return policy wouldn’t have been earned in the first place. Clearly, a bad return policy isn't an option.
But what return policies will win shoppers’ hearts? First and foremost, our respondents said they looked for businesses to provide full refunds, not just exchanges or store credit. Giving a full refund shows customers that you believe in your products and you trust that they're smart enough to see the value. When you lock customers into additional transactions via store credit, you suggest that the only reason to shop with you is “free money.” Thus, when the store credit expires, so does your relationship with the customer.
Tight return windows also bothered many of the shoppers we surveyed. Many gift-givers are opting out of the December rush and instead are purchasing gifts in October and November. At the end of the holiday season, many recipients avoid returning their unwanted gifts right away because of the crowds and low inventory. All parties want to know that the value of the gift won’t disappear within days of it being received. Allowing returns after 90 days or longer is a win-win for shoppers and stores alike. A three-month-plus policy reduces your customer service traffic and keeps your mailroom operating at a manageable pace in January.
If costs prevent your business from adopting longer return windows, you may want to implement the Jet.com model, which lets shoppers decide if they would like to pay more for the option to return. This transparent approach empowers customers to make their own value judgment while also incentivizing final sale purchases. Jet.com avoids the reputational damage of a bad return policy by putting the responsibility in the hands of the consumer.
One of the biggest frustrations for retailers and consumers alike is lost receipts. Retailers, of course, want to ensure they’re not paying for stolen merchandise. At the same time, many gift-receivers want to return items without proof of purchase because they weren’t given the gift receipt and feel uncomfortable asking.
Both perspectives make sense, so what’s a retailer to do? Our respondents brought up a variety of policies they liked, and the best solution by far was a rewards program that linked to purchase history. This lets the staff verify the purchase using information like the giver’s first/last name, email address and phone number. Awkward conversation averted!
As consumers bring back their rejected presents this January, businesses should view return season as an opportunity to make a positive impression. Our survey revealed that more than 63 percent of consumers would not visit a retailer again after a negative return experience. By providing full refunds, lengthening return windows, and developing fail-safes for lost receipts, your business will set itself apart as a retailer worth shopping year-round.
Aydin Karadeniz is the CEO and Founder of Promocodes.com, a consumer savings resource offering coupon codes and deals from the nation's top retailers.
Related story: These Retailers Have the Best Return Policies