The three Pillars of a Great Returns Policy

The post Christmas period is the busiest time of the year for sales returns. The usability, simplicity, and efficiency of your returns process is all part of your customer service. Pure-play online retailers and Multi-channel retailers both have different challenges. Are you prepared? How will you manage the process? How will you minimise the revenue fallout by cross selling and up selling? How will you maintain a high level of customer satisfaction?

There are plenty of reasons why it’s vital to have a crystal-clear returns policy. It helps to streamline your business practices, which can reduce costs and limit loss of revenue, sure, but perhaps more importantly, it can be a simple, cost-effective PR tool.

For many shoppers, the decision to purchase a sight unseen product online is contingent upon there being an easy to understand returns policy, so in this way, it not only helps to bring in new customers, but is also a cost-effective way of maintaining customer loyalty.

3 Pillars of a Great Returns Policy

There are three main returns policies to consider. The first, and least appealing to most online shoppers, is a no-returns policy. This ‘as is’ approach to selling is by no means uncommon, and might even have the appearance of saving you money, but in the long term implementing this policy might have serious fallout when it comes to building customer trust and loyalty. However, if this is the path you choose, make sure this is clearly stated in an obvious location. For example, during the check out stage of purchasing, it’s a good idea to have a returns policy agreement section with the customer, which has all of the details of your policy and a box they check to agree.

The second type of policy offers either exchange-only or store-credit only returns of goods, rather than a full refund. This can create potential to cross-sell and even up-sell, and your business can benefit from having a returns strategy that includes an easy to find reference to other products that are similar to those purchased. Large online retailers commonly use this type of cross referencing system to inform customers of products that other shoppers have purchased, as well as a list of similar products to those they have already purchased.

This policy also has its benefits for a business that receives the majority of its revenue from credit cards. That merchant fee you pay for the original transaction will not be refunded to you when you refund to the customer, and this can add up over time. This, of course, you will have to weigh up against the cost of losing customer loyalty, as some customers will prefer to shop with those who have a full refund policy.

As the name suggests, full refund policies offer customers a full refund on defective goods, and in many cases, on goods that are the wrong size, wrong colour, or just not what they expected. There are a couple of points to consider with this policy. For example, have you made it clear to your customers that certain items must be still in the original packaging? Are perishable goods returnable? The key is to plan ahead by writing up your policy and making it easy for your online customers to access and understand.

The cost of returning the goods is one of the most important points to consider. In some cases, it might be worth paying for the return postage, and is a great tactic if large-ticket items such as jewellery need to be tracked. For most businesses, though, the sheer cost of this is prohibitive. This is also where the difference in being a pure play or multi-channel online trader reveals different challenges.

Pure-play online retailers, because they deal with just the one delivery and return channel, can more effectively streamline processes and calculate the costs of return postage or freight. However, multi-channel online retailers will find it more difficult to predict such costs, as their sales may be returned through either the delivery channel, or in-store over the counter. In the case of many multi-channel online retailers, the cost of returning items still lies with the customer. If this is the policy you choose, make sure your customers are aware of it before they buy.

Whichever returns policy option you choose, it’s time now to write it up and place it in an easy to find location on your site. Not only does a clear policy help to increase your revenue by encouraging trust in your business, it can also reduce return disputes, which, in the post-Christmas season, can play a vital role in streamlining your returns processes, cross-selling to other products, and most importantly, maintaining customer satisfaction.