Does Incentivizing Shoppers to Use Store Credit Actually Work?
We all like something free and extra.
That's why the Amazon effect, the phenomenon that has led countless ecommerce retailers to adopt customer-centric practices and return policies like offering free shipping and returns, has been so effective in increasing purchase conversions.
So, if incentivizing shoppers during the marketing process is so effective, does the same principle also apply during the returns process?
Can retailers soften the blow of returns by encouraging shoppers to choose store credit over a refund? After countless requests from our curious Shopify retailers, we decided to put this theory to the test through data-driven analysis.
Why Store Credit?
Store credit offers retailers several advantages, some of which include lower financial burden, reduction of credit card chargeback costs. But, most important is increased customer retention, which is the driving force of growth for many ecommerce brands.
The Popular Store Credit Strategy
Many retailers have started experimenting with strategies to encourage customers to choose store credit over refunds.
One popular strategy is offering shoppers X% more money back in store credit than the purchase price of the product. For instance, if you were to buy a product for 100 dollars and decide you didn’t like it and returned it, you would get more than 100 dollars back in store credit.