How To Successfully Construct A Refund Policy That Works For You And Your Customers

Published 27th April 2021

When it comes to returns, ask yourself this question. Would you rather have an upset customer that’s stuck with an item they don’t want or a happy customer able to make their return with ease? One will blast you with a bad review and never return. The other will continue as a loyal customer. The way you build your refund policy will determine which result you get.

The reality is that how you handle returns can be more important to your customer experience than any other factor. When you offer a customer-friendly refund policy and ensure that your shoppers are aware of it, they’ll be more comfortable purchasing — you’ve removed the risk.

More importantly, if you make good on your refund promises when a customer needs to take advantage of them, you’ll create a happy customer for life.

Refunds can be expensive, but the alternative is worse. And when your policy is well-crafted, return costs are an investment that pays dividends. You’ll end up selling more and turning your customers into raving fans. Let’s jump into how to craft the perfect policy.

Don’t overcomplicate things

Your refund policy isn’t the place for dense legal language. Confusing your customer only reduces the chance that they’ll purchase. Keep the language accessible, short, and friendly. Make sure to include all relevant details, spelling out precisely what they can expect from you, and vice versa, but keep the language simple.

Make it easy to find

A good refund policy is an investment in customer service, so don’t bury it. You want your customers to take advantage when they need to, after all. If they can’t, you could lose them, and it’s not worth risking a lifetime customer over the cost of one sale.

Automate the process

Automation is particularly beneficial for online business owners such as yourself. Create a simple, self-service refund procedure. Not only will customers consider this a convenience (who wants to pick up the phone these days?), but it will also limit employee involvement, which saves you money.

If you can, make it returns free

It might seem counterintuitive, but free returns can be good for your bottom line. They’ll cost you more upfront, but they remove the last barrier to an accessible return policy, which leads to a greater sales volume in the long term.

The adage, “Don’t cut off your nose to spite your face,” applies here. Charging customers to return merchandise they don’t want will leave a bad taste in their mouth. They’ll think twice about shopping with you again, and the cost of all those future sales lost could be greater than the one return.

Give your customer options

You should make it easy for customers to get a refund, but if you give them options that are less costly for you, they may take advantage.

As an alternative to a refund, offer them store credit. If they shop with you frequently, they may accept. They still get their money back, but in a form that is guaranteed to wind up back in your pocket.

And if store credit is good, then exchanges are even better. Your customer gets a fast replacement for the item they ordered, and their money never leaves your bank account.

Anticipate customer questions and then answer them

Put yourself in your customers’ shoes. What would they want to know about your refund policy? What concerns might they have? Try to address any potential sticking points before they occur. This reduces friction and sets customer expectations before they buy.

Remember, your customers are human

And humans are messy. They make bad decisions sometimes. Don’t set your policies based on an unrealistic view of your customers.

They might sit on a purchase for weeks before opening the box. They might dither about whether the item is right for them far longer than one might reasonably expect, so give them ample time to make a return.

People make mistakes. They buy things they shouldn’t and sometimes purchase more than they need. Don’t punish them with a strict return policy.

If you offer a generous refund policy, some might take advantage, but the lion’s share won’t, and you don’t want to penalize good customers for the actions of a few lousy ones.

Your refund policy should make the process as painless as possible. Effortless returns create satisfied customers, and happy customers return to spend far more money than you might lose on a single refund.

So play the long game. Be generous and reap the rewards.

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