E-commerce News and Insights
Feb 20, 2020

Using the Returns Process to Drive Growth

Story Highlights:

  • Customer returns don’t have to be seen as a negative—use them as an opportunity to delight
  • Two thirds of shoppers say they’ll buy more online if free returns are available
  • 95 percent of survey participants said the smoothness of a company’s return policy plays a role in their future buying decisions
  • The more liberal you are with your return policy, the more confident you’ll appear about the products you sell

The Story:

As a growing merchant, it’s natural to want to focus on driving sales. That revenue is what powers your business and boosts profit and growth. The other side of the coin is that a portion of those sales may ultimately result in returns and refunds, which might feel like a step backwards. While that doesn’t sound like much fun, there are actually some positive aspects associated with returns. And that’s why having a clear, customer-centric returns policy can actually be a major way to boost your sales, increase customer loyalty, and provide some essential fuel for great online reviews.

Retailers Judged By Their Return Policy

Surveys bear out how important the ability to return a purchase is to consumers and how they’ll often make shopping decisions based upon return-related experiences.  

A December 2018 survey shares how a whopping 88 percent of shoppers want the ability to return their purchases, if desired, either by taking them to a physical store or using a shipping method that’s prepaid. In fact, in that same survey, nearly every participant—95 percent of them—said that the smoothness of a business’s return process will play a role in their future buying decisions—meaning, whether they’ll buy from that company again or not.

The reality, though, is that return processes often don’t go smoothly at all, which is really an opportunity for small businesses to outdo their competition, including companies that are larger and/or more well known. By being smaller, you’re naturally more in touch with the day-to-day of your business, so you can make returns a focal point, whereas to a massive company, returns are often just impersonal transactions. 

In short, returns are an opportunity to delight.

Elements of a Customer Friendly Return Policy

First, write a straightforward policy that’s simple to understand. Explain what customers should do if they need to return something, including how long they have after the purchase to do so. If there is a situation where returns can’t be fulfilled, like on clearance and “final sale” items, then you’ll need to clearly outline that.

Also differentiate between returns and exchanges. Are there times when your company can’t refund the customer’s money but can exchange an item for a gift card to your store? Does an item need to be in a certain condition for a refund or exchange to be made? What are the specifics? Be clear.

Benefits of Free Returns

When you allow free returns, it may cost your company some cash up front. But in the long term, your customers will appreciate the flexibility and in many cases, become more loyal.

When asked what would cause survey respondents to purchase more items online, one study shows that 93% of customers would purchase more if free shipping was provided—and here’s the second most commonly listed answer: 67% of them said that free returns would encourage them to buy more online. So, although free returns may create an expense, it also serves as the pathway to gaining loyal customers. 

Plus, the more liberal you are with your return policy, the more confident you will likely appear about the products you sell—and that can be a plus for your emerging business all by itself.

Make Your Policy Easy to Find

The greatest return policy in the world is useless if no one knows about it.

According to a UPS report, only 60% of shoppers were satisfied with their ability to find a company’s return policies, while two thirds of shoppers (66%) want to review them before purchasing. These stats suggest that there’s a sizable portion of consumers that may be willing to forego making a purchase if they can’t find the return policy information they’re looking for.

So, for e-commerce sites, there should be a clearly written, easily found online return policy. In fact, it can make sense to include it in multiple places, including on your FAQs page, on individual product pages, and in the checkout/cart page.

In a physical store, make sure that your store team can clearly explain your policy to customers and provide them with or direct them to the written policy. Have it posted by locations where customers pay for their merchandise. Also clearly indicate what items are considered to be clearance ones, and list on relevant signage that these are no-refund purchases.

Although it may seem counterintuitive to tell your customers how to get their money back right when they’re buying, customer relationships are stronger when policies are clear. 

If you make it easy for shoppers to find and understand your policies, then you’ve set expectations ahead of time about procedures. Will this satisfy every single customer? Probably not. But this will go a long way in helping you to build long-lasting relationships with your customers.

Nuts and Bolts of Returns

In a physical store, you may have signs that point to where returns are processed.

For online returns you don’t have that luxury, so it makes sense to include a return label when the item is initially delivered, and a place to go online if they need to get a duplicate. Be sure to share the steps needed to get a return authorization, making them as clear and straightforward as possible.

Make Returns Part of Your Brand Story

In a crowded marketplace, it can be challenging for an emerging merchant to gain attention and build customer loyalty. One way to accomplish this is through effective storytelling about your company. One noted psychologist said that stories can be 22 times as memorable as unvarnished facts—and small businesses can provide brand stories just as well as larger ones. As you share that story, think about including a compelling anecdote about how easy it is for customers to return products.

Having a customer friendly policy that’s presented in a unique way can help your company to stand out as a brand, rather than as a company that’s simply selling products on a massive marketplace. And in the era of dominating online marketplaces, creating a compelling brand that provides a positive customer experience is a key differentiator.

Harness the Power of Online Reviews

“The first and most obvious thing to do: provide the level of service that will make people want to say good things about you. Word of mouth marketing is incredibly powerful.” (DAGMAR Marketing)

Positive online reviews can go a long way in helping your business attract new customers. In fact, 85% of consumers surveyed said that they trust online reviews as much as they do personal recommendations. (When only considering 18- to 34-year old shoppers, 91% of them trust online reviews as much as personal recos.) A similar percentage of 83% trust online reviews more than they do company advertising.

Given that the majority of people trust online reviews more than company advertising, you can ask customers who’ve had seamless return experiences to write a review for your company. As far as Google Reviews, you can even create a direct link to where they can post their review about your business.

Here are three key things to note:

  • It’s okay, as far as Google is concerned, to ask customers for a review. And, it’s even okay to only ask select customers for one (meaning, people you already know are satisfied).
  • What you can’t do: specifically ask for a positive review, or promise to give any sort of reward if they post one.
  • Yelp, on the other hand, does not permit businesses to ask anyone to post a review.

Although it would be wonderful if all online reviews were positive, that’s very seldom the case—and in reality, it could even look suspicious to savvier customers. The good news is that a few less-than-stellar reviews can arm you with the critical information needed to help you up your operations game, making it more customer-responsive.

So, what can you do?

Strive to Improve

First, put your returns into context. As noted in a recent post about National Returns Day, nearly two million shoppers shipped items back to online retailers via UPS on January 2, 2020. This was the first return-to-work day after the holiday season—and this year, returns were 26% higher than last year’s figures.

The number of returns has likely gone up because there are increasing numbers of customer-friendly incentives available online, making it more tempting to purchase interesting looking items. Couple that with a decent job market and you’ve got people buying things that may or may not be the right for them, or those they gift. So, if your returns were higher this year than last, then it’s possible you are part of this trend.

As part of this improvement process, also look at your online reviews and the direct feedback that you’re getting from customers. How satisfied are they, in general? What about the quality of your products? If reviews and comments are less glowing than you’d like, then you can use this as a chance to improve upon issues and solidify relationships with your customers.

Think of feedback as key intel into the psyche of your customers. If for example, you sell apparel and a good percentage of returns have been based on sizing issues, then this feedback allows you to take a second look and adjust where you can. Once you’ve resolved the transactions, you could send a discount code to customers who returned apparel items in an email that conveys how you’d like them to shop with you again.

What about creating a loyalty club? Or, if you already have one, how can you expand upon it? What are you learning about what your customers and prospects value?

As one supply chain consideration, if you find that having a more liberal policy is causing you issues, financially, you can focus on securing better return policies with your manufacturers and distributors. The ease in which your company can return items can have a direct correlation with how effectively you can offer customer friendly policies of your own.

Making Return Policy Adjustments

At some point, you may decide to adjust your return policy. You might adjust it for a specific season, such as the holidays or another time of year that’s especially busy or otherwise important for your business.

Or, it may be that you’ve found ways to improve upon your return policies, overall. No matter why you’re adjusting your policies, it’s important to communicate those changes with your customers. This includes on your site, receipts, points of sale in physical stores, and more.

Make It Seamless

When you make online returns a seamless process, it will play a key role in growing your e-commerce business. It all comes back to instilling a sense of convenience and coverage for your customers, and making returns hassle-free will go a long way in achieving that.

Explore Shippo for ways to simplify your shipping and returns process.

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Kelly Boyer Sagert
is a full-time freelance writer living in the Cleveland area. Her range of expertise spans business, finance, logistics, automotive, e-commerce and more.

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