Does Incentivizing Shoppers to Use Store Credit Actually Work?
We all like something free and extra, and that's why the Amazon effect, the phenomenon that has led countless e-commerce retailers to adopt customer-centric 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 a data driven experiment and analysis.
Why Store Credit?
Store credit offers retailers several advantages, some of which include lower financial burden, reduction of credit card charge back costs, and most importantly— improved customer retention, which is the driving force of growth for many e-commerce brands.
The Popular Store Credit Strategy
Many retailers have started experimenting with strategies to encourage customers to use store credit over refunds. One popular strategy is offering shoppers X% more money back in store credit than what they originally bought the product for. 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.