10 ways you can create an effective returns policy

Returns, refunds, and exchanges are all a part of doing business. Customers may be dissatisfied with their order for a variety of reasons, such that it arrived damaged, they got the incorrect size, or it just did not match their expectations. As a result, they will likely want a replacement or a refund. However, without a structure in place to handle these requests, they may consume a significant amount of time, energy, and money. You will be forced to spend hours on customer service emails and suffer from increases in shipping costs for replacement items, especially after the holidays. 

If a consumer is unsure about making a purchase, they will want to know that your company will not make it difficult to return something. An excellent refund policy encourages customers to make a purchase and allows them to buy without fear of repercussions. A strong e-commerce return policy can make or break a sale and convert a visitor into a lifelong customer. 

What is a Return Policy? 

A return policy is a detailed document that explains your company’s process and conditions for accepting returns. It also discusses what customers should anticipate and how to initiate a return. Your return policy protects your company against improper returns and credit card chargebacks, which might result in financial loss, and it serves as a guideline for both parties. 

Returns vs Exchange 

In e-commerce, the customer generally determines whether they want a return (which means a refund) or an exchange (usually for a gift card or a replacement product of equal value). It’s critical to figure out which of the two groups the client belongs to early on in your system so you know how to handle their request. Before a product is sold, it should be examined if it may be returned, exchanged, or both, and this should be mentioned on your website within your return policy page. 

With the holiday season not too far away, expect your return rates to reach a year-high. Holiday return rates are twice as high as the rest of the year, but customer satisfaction with those returns is much lower. The holiday gifting season can be a stressful time for buyers. With so many expectations and obligations around gift-giving, t’s no surprise that many of the presents we give fall flat. This ultimately leads to gift returns.   

Handling increased returns during the holiday season requires an efficient return policy. Designing a suitable return policy is an important element of your company strategy, because a lenient return policy may lose you money.  

Here’s how you can create a better return policy that’s a win for both you and your customers: 

Have a Well-Defined Policy 

You should establish a fair and transparent returns policy for clients. Your policy should specify which goods are returnable or exchangeable, in what condition they must be returned or exchanged, and how and when consumers may make such returns or swaps. This will especially be beneficial in effectively handling holiday returns.  

No Need to Include Technical Jargon 

Clear communication is the foundation of a great returning experience. Using complex language that can only be understood with the help of a legal dictionary will only terrify consumers and result in increased support service requests. This wastes time and money that might have been easily avoided by implementing an excellent return policy. You’ll make things simpler for everyone if you provide your consumers a clear and straightforward description of how to process a return. Use verbiage that your consumers will understand, and don’t be afraid to add some personality to your return policy. You’re good to go as long as your policy is clear, concise, and not subject to interpretation. 

Make your Return Policy Visible 

A return policy is only as effective if it is visible. Promote your returns policy as you promote your products. Ensure that your return policy is easily accessible. It should be prominently displayed on your website, in customer correspondence, and on sales receipts. Consumers may feel more comfortable buying from you if you make your return policy clearer, resulting in more sales, happier customers, and eventually fewer returns.  

Be transparent about any fees associated with returns  

Nothing is more frustrating for a customer than getting a product they don’t like, just to find out they have to pay to return it. Your return policy should explicitly mention who will bear the associated costs like return shipping, restocking, etc. If you want your customers to be responsible for the cost of returned products, make sure it’s clearly stated in your policy. Sending customers a return shipping label or offering to discount shipping charges off their next purchase can keep them satisfied and coming back to your online store. 

Establish the Condition of Returns 

Make sure your return policy clearly defines the condition a product must be in for it to be returned. It’s one thing to accept an unused product that the customer was unhappy with, but it’s quite different to accept a return that has worn out after repeated use. Include terms such as “unused”, “as-new”, or conditions such as “return within 30 days” in your return policy to clearly define what makes a product eligible for returns. If you do not include such conditions, customers will try to return goods in condition too poor to be repaired, let alone resold, and you will have to incur losses.  

Determine the Method of Compensation  

Customers want to know how they’ll be reimbursed before returning a good. Most individuals would grab the cash and go if given the opportunity, but there are ways to persuade them to stay and take shop credit instead. You can encourage customers to use store credit by providing free return shipping. Store credit is better than a refund because it keeps the money locked in your store. Alternatively, you can also offer an exchange to your customers to keep those just needing a different version of your product. In the case of a faulty or damaged item, your policy should always be to give a replacement or a complete refund including shipping expenses. Respond as soon as possible, apologize for the inconvenience, and then make things right for your consumer. 

Keep Industry Standards in Mind 

You should also consider how others in your business handle returns. You should never exactly replicate another company’s return policy. However, you can simply look at what other businesses provide and ensure that yours is at least equivalent so that shoppers do not perceive your policy to be particularly unfair. 

Create a Special Holiday Policy  

The holidays offer unique situations for buyers that don’t occur normally. For example, you might normally require returns to be made within 30 days. However, in certain cases, early buyers may not be giving their holiday gifts within that time frame.   As a result, even if the recipient tries to return the item straight away, they will be unable to do so. Therefore, you may wish to provide some holiday return flexibility, but be sure to clarify the policy.  

Train your Employees 

You must also make certain that your staff has the capabilities to take on returns management. Ensure that all workers understand your return policy and processes so that they can help clients promptly and effectively. You must be sure that your team can answer inquiries from customers about the returns process and is ready to receive the incoming returns. 

Collect and Analyze your Return Data 

You should also retain detailed records of all of your returns. If the same item is being returned repeatedly, there may be a problem with the product or the way it is being marketed. Analyzing returns data can help you get a better understanding of why customers make returns so you can try to reduce them in the future.  

Customers return items for a variety of reasons, the most common of which is ordering the incorrect item or size. It is easy to point the finger at the customer for this error, but there are several things you can do as a merchant to avoid returns. 

Partnering with a good 3PL company that efficiently handles your fulfillment process and ensures the delivery of correct items can also greatly reduce returns. At Fulfyld, we double-check each package while picking up and packing, have organized storage to prevent delivery of wrong orders, and even provide returns management.  

Contact us today for more information!