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How To Use Your Return Policy To Drive Sales
6 Things to include in your return policy
Every online store has a return policy, but not all of them are created equal.
Some online retailers slap together a one-size-fits-all return policy that’s copied from a template they found online. Other brands take a more thoughtful approach and craft a great return policy that makes sense for their customers. Guess which one wins? We’ll explain how a well worded and structured return policy can lead to higher customer loyalty, and more potential customers while sharing best practices for creating your own hassle-free return process.
How to use your return policy to drive ecommerce sales
67% of online shoppers check the returns page before making a purchase. This means that your return policy is usually the first purchasing touchpoint a customer has with your brand. The impression that your return policy leaves on customers can heavily influence their future purchasing decisions.
Make a good first impression with your return policy
For instance, let’s say you have a customer-centric return policy that offers free return shipping, a flexible refund policy, and an effortless customer experience. You’ll likely make a positive first impression on customers and increase the likelihood that those customers return. On the other hand, a rigid ecommerce returns policy that protects the business rather than serving the customer will ultimately lead to lower checkout conversion rates, fewer online purchases, and lost revenue on your bottom line.
Your return policy as a marketing asset
Also, keep in mind that a strong return policy can provide value beyond just the returns process. It can also be leveraged as a marketing asset - whether it’s on your ecommerce store homepage, marketplace product pages on Amazon or Walmart, your brick and mortar store POS or in paid advertisements - as a way to acquire more customers and encourage them to purchase.
6 key things to include in your ecommerce return policy
What exactly do customers want to see in an online returns policy? That’s a great question, and one we asked over 300 consumers in a survey. Here are the top priorities indicated by customers:
Who pays for return shipping costs
44.5% of respondents want to know who is going to cover the cost of return shipping. You might want to think twice before putting that burden on the customer: our survey also found that 74% of shoppers would be hesitant to shop from a brand that charges them for return shipping or return labels.
Probably the most famous ecommerce return policy comes from Zappos and their late CEO Tony Hsieh. Here is a quote from his book Delivering Happiness: A Path to Profits, Passion, and Purpose.
We also offer a 365-day return policy for people who have trouble committing or making up their minds. At most ecommerce websites, the contact information is usually buried at least five links deep and even when you find it, it’s a form or e-mail address that you can only contact once. We take the exact opposite approach. We put our phone number (1-800-927-7671) at the top of every single page of our Web site, because we actually want to talk to our customers.
The length of the return window
Your return window can also influence a customer’s purchasing decisions. 33.8% of consumers would think twice before shopping with a brand that has too short of a return timeframe. So consider offering something more generous than the standard 30-day window - like Brooklinen’s policy below.
Ecommerce return restrictions
39% of survey respondents said a policy that’s too strict about what can’t be returned is likely to deter them from purchasing in the first place. So limit the restrictions you put on returns, original packaging, and final sale items and make them very clear in your policy. Note that some state laws impact what can and cannot be sent back in the mail so check how this impacts your customers.
Information about exchanges
Not every customer wants a full refund when they request a return. In fact, almost 10% of our survey respondents said they look for information about exchange policy and store credit.
Instructions on how to start a return
Customers want it to be simple and intuitive to start an online return process. Keep in mind that 27.9% of respondents said they would be unlikely to purchase from a brand that forces them to interact with the support team for returns. Some on the other hand like the option of a store return.
Make sure each of these points is addressed in your return policy to keep it focused and concise. Everything else can be addressed on your FAQs page.
Best practices to write a return policy that customers love
We believe that a customer-centric policy always wins. We’ll take you through four best practices and some return policy examples that put your customers first and explain how this approach will ultimately help your business.
Keep the language simple
Your return policy is where your customer goes for answers - not to be more confused than when they started. That’s why it’s important to keep everything in your return policy as simple and straightforward as possible, from the language you use to the way you format your text to the policy itself.
Some brands think that creating a dense, clunky policy will lower their return rate. There’s some truth to that. Our survey found that almost 90% of customers have kept a product they actually wanted to return.
But this is bad news for your brand. Not only is it very unlikely that your customer will make more purchases from you, but they also probably won’t recommend your business to anyone else. This means lower Average Order Value (AOV), Lifetime Value (LTV), and fewer opportunities for organic customer acquisition. In other words, by making returns difficult, you’re costing your brand a lot more.
That’s why we encourage brands to keep it simple, like this return policy from Allbirds. In just a few sentences, it conveys everything a customer needs to know about returns.
Offer the option for an exchange with excellent customer service
Yes, returns are an inevitable part of running an ecommerce business. But contrary to popular belief, not all customers want a refund. Some people want to get the right product in their hands, which is where exchange policies or store credit provide the most value.
Exchanges are the best type of return because they keep the customer relationship going. This means you get to retain that revenue. Not only that, but studies have also found that a 5% increase in your customer retention rate can lead to a 95% increase in profitability.
Also, because you got the right product in the customer’s hands, you reinforce brand loyalty and make it more likely that they’ll purchase additional items in the future and recommend your brand to friends and family. All of these factors can boost your average order value, lifetime value, and future customer acquisition efforts.
But how exactly can you incentivize customers to opt for exchanges over refunds? There are a number of ways to increase the attractiveness of exchanges:
- Have a longer exchange policy timeframe than whats available for refunds
- Offer bonus credit to customers who opt for an exchange or store credit (like the example below)
- Only charge a return shipping fee or restocking fee on a refund
- Use an automated return portal for exchanges
Essentially, all of these strategies focus on making exchanges easier and more beneficial to customers than refunds.
Crafting a customer-centric return policy thoughtfully pays off. Not only will you build stronger relationships with your customers, but this in turn will lead to higher AOV, LTV, and revenue. Use our best practices to guide your approach to your own returns experience. If you want to see how your current distribution of returns stack up in your industry, you can check out the free returns benchmark report.
Use an ecommerce management system to process returns easily
A return merchandise authorization (RMA), return authorization (RA), or return goods authorization (RGA) is a part of the process of returning a product to receive a refund, replacement, or repair during the product's warranty period. this can vary based on the systems and sales channels you use (Shopify vs Amazon for example), the form of payment (gift card vs. credit card), and the pricing tier of the item looking to be returned or replaced.
Using RMAs, you can keep record product returns, produce and email confirmation emails and return shipping labels, and dictate how you want the returned inventory to be handled.
To craft a solid ecommerce returns policy you need buy-in from marketing (who handle on-site content), operations (who manage your internal systems), and any 3PL or carrier you use to fulfill orders and process return-logistics. Look for an operations platform that integrates with your returns software, and as a bonus use automation to make those processes even easier.