A return just may be the most divisive experience in ecommerce. As a result, your return policy has a substantial impact on the customer relationship, as well as your profits.
According to UPS, around 73% of shoppers base future purchase decisions off past returns experiences. And did you know that as many as 67% of shoppers may visit your returns page before making a purchase?
7 Best Practices for a Great Return Policy
Your return policy heavily impacts both your customers and your profits. A good return policy can even boost your sales.
The ReturnLogic team works with ecommerce brands every day to enhance the returns process for their businesses. We established some best practices to help you create an amazing return policy:
- Define the Priorities of Your Return Policy
- Ensure that your Return Policy is Easy to Find
- Answer the Big 3 Questions of a Return Policy
- Equip yourself to Enforce your Return Policy
- Present as Many Return Types as Applicable
- Offer at Least 1 Return Type that is Free
- Align your Return Policy with your Brand
1. Define the Priorities of Your Return Policy
Every business is unique, and your return policy should reflect your needs and workflows. But too often, a return policy can feel like it’s us versus them. You need to find the balance of short-term product focus and long-term customer focus that is right for your business.
A product-focused return policy concentrates more on the immediate costs and value associated with a return. The goals here are to minimize costs and to maximize recovery value on returned products. Product-focused return policies tend to be more strict, with shorter return windows, more exclusions and conditions, and greater fees.
A customer-focused return policy prioritizes the customer relationship. In this case, the primary objective is to make the most of the customer lifetime value through a smooth and consistent returns experience. Customer-focused return policies are more lenient, with longer return windows, few exclusions, and little to no fees applied.
But how should you balance these two priorities?
Your return policy is as unique as your business. We recommend using these criteria to find the right blend: the relative value of a customer, your typical profit margins, and the values of your brand.
The relative value of a customer reflects the average value of a customer versus the average value of a purchase. As an example, if your average value of a customer is 5 times greater than your average value of a purchase, you might want to be more customer-friendly than if a customer were only 1.2 times more valuable than a purchase.
Profit margins can vary widely by product category. Some enjoy a large profit from each sale, whereas others count on volume to win the day. The greater your profit margin, the more you can afford to be lenient with your return policy.
Keep your values as a company in mind when crafting your return policy. If you strive to be friendly, polished, approachable, or laid back, make sure that’s reflected. Perhaps no experience can be a better test of the customer experience than a return.
2. Ensure that your Return Policy is Easy to Find
As many as two-thirds of shoppers visit a site’s returns page before making a purchase. If your return policy is difficult to find, visitors will immediately lose trust. So, even though you may not want more returns, it should be quick and easy for a customer to begin a return.
Be sure to include a link to your returns page in the footer of your website, so it is always readily available.
Be careful not to bury the return policy in a section such as “Contact Us,” “FAQs,” or “Shipping.” But you can certainly include additional links to the returns page in these locations.
Try to minimize the number of clicks required for a customer to begin a return, and the returns experience will already be a little bit better.
3. Answer the Big 3 Questions of a Return Policy
When? How? What? A good deal of your return policy can come from these simple questions.
When refers to the return window, which specifies how long customers have to return a product. The return window may begin at the order date, the shipment date, or the delivery date if available. If fulfillment may be slow, you might want to use the shipment date or delivery date as the starting point, or offer an extended return window.
With respect to the length of the return window, we typically recommend a return window around 30-60 days. Try offering a longer return window for store credit and exchanges than for refund, to provide flexibility for the shopper and revenue for you.
How describes the return types – such as refund, exchange, store credit, and warranty – that customers can choose from. Exchanges tend to be widely preferred by brands in terms of profitability, but consider that pressuring a customer into an exchange won’t enhance the customer relationship.
We can subtly encourage exchanges or store credit, but must ultimately let the customer make the decision that’s best for them.
What specifies any product exclusions or conditions that must be met. Many retailers have final sale items that are non-returnable. Or maybe, you would like the tags to still be attached in order for a return to occur.
These stipulations are usually put in place to minimize loss of value on returned products, and to lessen the likelihood of returns fraud. Try not to be overly restrictive; a customer who is unable to return a product may be more unhappy than a customer who returned a product.
4. Equip yourself to Enforce your Return Policy
It’s not quite enough to have a great return policy; you need to be able to enforce it. That starts with simplification. The simpler a return policy is, the less confusion and friction it will cause among customers. And, a simple return policy is much easier for your team to implement, as well.
Try to reduce if/then business logic when possible. A more linear return policy is easier for customers and customer service representatives, alike.
It can be highly inefficient to have your team manually validate requested returns. An automated returns portal dramatically reduces the time spent on returns, as well as the customer friction in the process.
No one wants to give the customer bad news. Automation enables you to enforce your return policy without having to personally deny a return request. That’s smoother for the customer and for your team.
Just like with any rule, there are times that you may want to override your return policy and grant a special exception. Perhaps a loyal customer received a damaged product, or a new customer experienced unexpectedly slow shipping.
Almost as important as your return policy is your ability to override it in these unique cases. Determine what will be considered an exception, and the procedure for handling them. The more your plan ahead for special exceptions now, the less disruptive they’ll be when they arise.
Keep in mind the priorities you have established for your return policy, and you will be on the right track.
5. Present as Many Return Types as Applicable
The how of a return policy specifies the return types that are available, such as refund, exchange, store credit, and warranty. Be sure to offer as many return types as you can, especially exchange and store credit.
Return types such as exchanges and store credit may be more financially complex than refunds, but they keep revenue inside your company, and help to promote a long-term customer relationship.
A returns solution, such as ReturnLogic, can make it easy for you to process exchanges and store credit returns without the accounting headaches.
And don’t forget about warranty returns! While warranties aren’t relevant to every business, they show that you stand by your products. Your warranty can make or break the customer relationship in the case of a damaged or defective product.
Especially if you sell via third-party channels – such as Amazon, Target, Walmart, or AliExpress – make sure that your warranty program fits your products. ReturnLogic even supports third-party warranty returns through its platform.
6. Offer at Least 1 Return Type that is Free
Ecommerce giants like Amazon and Zappos have nearly set the expectation for free returns and free return shipping. In fact, a 2019 survey by Klarna found that 78% of shoppers would buy more over time if returns were free.
But not everyone is Amazon, and free return shipping is not always feasible.
We recommend that you offer at least one return type that is free. Perhaps exchanges or store credit returns, for example, have free shipping and no additional fees.
Keep in mind that the cost of shipping may be small compared to the value of a customer. If free returns help you to retain some customers, it may be well worth the cost.
7. Align your Return Policy with your Brand
In order to stand out in ecommerce and create a consistent customer experience, branding is often a high priority. This same focus must also be present in the returns experience, especially with the return policy.
Your return policy shapes how your customers view your brand.
So, be sure that your values and tone are appropriately represented in your return policy. And of course, format your returns page to be a natural extension of the customer experience.
There should not be a striking contrast between your returns page and the rest of your website.
Going Beyond the Return Policy
Your return policy controls most of the returns experience from the customer’s perspective. And as a result, your return policy can make or break the customer relationship.
With these 7 best practices, you are well on your way to a great ecommerce return policy, and one step closer to a better returns process. But don’t stop yet!
Ecommerce returns solutions, such as ReturnLogic, enable your customers to start returns on their own, while enforcing your return policies.
ReturnLogic also provides smarter returns automation to help you streamline your returns process without compromising your control or visibility over returns.