How to Create a Return Policy

Below find the best tips and tricks to create a reputable return policy and put the “fun” back into “refunds.”

No matter how great your brand is, without fail, someone, somewhere, is going to be unsatisfied with their purchase for a myriad of reasons. This was an irksome reality before the internet, and now that online shopping reigns supreme, it’s even more so. Managing customer returns and return policies must be done diligently, and with finesse, lest you ruin your profit margin. So, what’s the best way to create a return policy that works for both you and your customers?  

Returns are the Worst

First, let’s acknowledge the reality of returns: they’re awful. For one, there’s the emotional part. If you take even the slightest pride in your product, when someone buys it, and then decides they don’t want it, it’s probably going to sting a little bit. For this issue, we suggest (in the kindest way) getting over it. Just like in real life, not everybody’s going to like you, and there’s really nothing you can do about that. The worst way you can handle it is to take it to heart and let it ruin your day.  

Then, if that’s not bad enough, there’s the economic consequences of consumer returns. According to the National Retail Federation 2018 survey, total merchandise returns for that particular year accounted for almost $369 billion in lost sales for US retailers. That’s about 10% of all sales—which is not a small number for big stores or for little shops.

Not only is revenue lost when a product is returned, oftentimes the product cannot be resold at its original price. Or, by the time it is returned, it is obsolete or out of season. Plus, if you accept returns on products that require FDA approval, if they have been used or if the seal is broken, the product will no longer have any resale value.

And, on top of all it all, there are the customers. You know the ones—the ones that will stop at nothing to get their money back and then some. These customers will wear you down and have you second guessing your commitment to your sanity and your livelihood as an online retailer. What’s a merchant to do when their patience is worn thin by problem customers? How you choose to deal with returns across the spectrum (from easily managed to nightmare scenario) will impact the perception of your brand.  

For these reasons, returns are truly the worst. The only effective way to deal with all of that negativity is to create a return policy that is gracious, yet ironclad.

How to Create an Online Return Policy

Creating an exceptional online return policy that mitigates return fraud and keeps customers coming back is one of those things that is easier said than done. Considering that the percentage of returned sales jumps from 10% to 30% when looking at internet sales, the stakes are higher for online-only stores. Read on to find seven ways to get your return policy right.

1.     It’s all about trust.

In any context, trusting someone (or something—like a store) infers that you believe–wholeheartedly–that they have nothing up their sleeve. This is why the number one tip to build your best online return policy is to make sure it is accessible, straightforward, and easy to read.

With that in mind, make sure your return policy is visible on your homepage. Customers do not want to have to delve into the depths of your website to find out if they can return something they don’t like. Additionally, your return policy must be easy to understand and written in plain language. that it is also easy to understand and written in plain language. While it is illegal in some states to not have a visible returns and exchange policy, that doesn’t mean it needs to be written in legalese. Keep it simple and to the point by using everyday vernacular and a clean format.

2.     Set yourself apart.

How can you use your return policy as a competitive edge? While you’re developing how you want your shop to manage returns, do some investigating and see what your competitors offer. You may never be able to offer a return policy as lenient as Amazon, but you can set yourself apart by modifying your policy to be a little bit better than those of the competition. For example, you can extend your return window or offer free return shipping. It doesn’t have to be anything big—just enough to define your brand in a unique way.

3.     Use the opportunity.

Just because one of your products didn’t work out for a particular customer doesn’t mean that they might not like a different one. If a customer is initiating a return, use the opportunity to make some sale suggestions. Of course, like most things retail, there’s a tactful way to try and make a sale, and an annoying way. Being subtle is always better than being pushy. One way to seize the moment is to outline an exchange policy in tandem with the return policy and incentivize your customers to exchange items rather than return them for a full refund.

4.      Make it comprehensive.

Your return policy should be as foolproof as possible. Make sure that it includes an answer for every foreseeable return-related occurrence possible. If your customer is seeking information on how to return an item, make sure that—no matter the complexity of their question—they can find an easy to understand answer in your return policy. Here are some topics to make sure you cover:

·      Return shipping materials,
·      return shipping costs,
·      in store credit options,
·      return time frames,
·      instances in which returns aren’t accepted;
·      and any proof of purchase requirements. 

5.     Build your brand with your return policy.

Companies like L.L. Bean and REI have used their return policy to build brand loyalty. Both companies are known for their gracious and lenient return policies. Nordstrom pioneered an industry standard with theirs; Costco keeps customers coming back with theirs. What are some ways, no matter your size, that you can use your return policy to build your brand? Without sacrificing your profit margins, try to mirror your brand beliefs in your refund policy.

6.     Pivot.

If you’re drafting or revamping your return policy, take a moment to do some analysis. Look into what products customers are returning the most. If you’re receiving return requests on particular products over and over again, it might be time to figure out why, or remove that product from your shelves entirely. If you are an online clothing retailer and you’re receiving returns due to sizing issues, update or make the sizing information more accessible on your website.

If you are receiving return requests with no particular explanations, consider selling sample sizes or offering a “try before you buy” option. There are a multitude of ways that the negative connotation and economic impact of returns can be subdued. Make sure you look into which ones might be right for your store before finalizing your return policy.

7.     When in doubt, let them win.

Even if you have the most exquisite, eloquent, and downright delightful return policy, you won’t win them all. Some customers will want to return products that they bought two years ago. Or they’ll want to return products that they’ve used a million times. And—if you don’t oblige them—they’ll leave terrible reviews about your business. Just like returns, some customers suck and that’s all there is to it. If you run into one of these gems, just let them win. Assuaging them will keep them from tarnishing your reputation online or offline. Hold fast to your return policy at every opportunity that you can, but don’t risk stars on a review just to “win” against a headstrong customer.

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