Four Ways a Liberal Return Policy Creates Customer Confidence

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Every business has returns. It doesn’t matter if you’re B2B or B2C. Returns are inevitable. The industry that probably has the most returns is retail. It’s just a fact. Beyond defective merchandise, which happens in any type of business, someone won’t like that sweater you picked out. Someone has no use for that gadget you thought he or she would love. You get the idea. So, just count on it. It’s going to happen. The question is, how well will you or your business handle it?

Regardless of the type of business you’re in, a good return program is important to your overall customer service and experience strategy. Stats and facts indicate that 85% of customers will not do repeat business with a company where returns are complicated or inconvenient. So, think about this:

How easy are you to do business with?

Ideally, you make it easy to buy from you. You create a positive customer service experience that would make someone want to come back and do business with you again. If for any understandable reason your customers want to return what they bought from you, it shouldn’t ruin their overall experience with you. If anything, that interaction can actually lead to a higher level in customer confidence.

With that in mind, here are four ways to handle the return that not only make it easy for the customer, but also boosts your customer’s confidence, making them want to come back and do business with you. Why? Because you are easy to do business with.

  1. The return policy should be easy to find. Be it posted on a sign in a store or easily found on your website, make it obvious for everyone to see or find. A friendly, customer-focused return policy creates trust, which leads to confidence. Confidence turns into sales and even customer loyalty.
  1. Just take it back. No questions asked. Are you confident enough in the merchandise you sell to stand behind it? If not, why are you selling it? I once interviewed a CEO of a business and he said he wanted the easiest and most liberal return policy in his industry. He said, “If you don’t like the color of the box, we’ll take it back.”
  1. Have agreements with manufacturers and distributors that will take back return items – ideally for any reason. This will give you the flexibility and confidence you need with your merchandise. If you are the manufacturer, go back to number two: Just take it back.
  1. Don’t create return policies to protect yourself from a tiny percentage who might try to take advantage of you. This is very Yes, there will always be those that try to return a used and abused item – and without a receipt. Don’t penalize your honest customers for the sins of a few.

So, think about your return policy – does it make you easy to do business with?

Republished with author's permission from original post.

Shep Hyken
Shep Hyken, CSP, CPAE is the Chief Amazement Officer of Shepard Presentations. As a customer service speaker and expert, Shep works with companies who want to build loyal relationships with their customers and employees. He is a hall of fame speaker (National Speakers Association) and a New York Times and Wall Street Journal best-selling author.

2 COMMENTS

  1. I’m interested in the statement, “Stats and facts indicate that 85% of customers will not do repeat business with a company where returns are complicated or inconvenient.” – because it’s a tad ambiguous. Does this finding reflect just the sentiment of customers who have tried to return something, and found the experience unsatisfactory? Or, does it include customers who haven’t returned a purchase to the vendor, but perceive that the steps for doing so are convoluted, therefore, they don’t want to risk that problem?

    I ask this because I buy repeatedly from many retailers whose return policies are unknown to me since I’ve never had a return transaction. For all I know, their return policies could be restrictive, which might turn me off for future purchases.

    In general, I agree that liberalizing return policies makes better business sense. Many consumers experience difficulties with products (or in buying them), and those scenarios don’t fit cleanly into written policies. This adds significant pressure on employees who expected to enforce policies that are inflexible to the point that they are dysfunctional. Everyone – customers and employees – go away mad. That’s a ‘fail’ in my view.

    Still, I believe that businesses need to protect themselves the high costs of absorbing certain categories of returns, such as custom-made products. For example, if Home Depot mixes a custom paint color for me, does it make sense for them to accept the return if I apply the paint in a small area and don’t like the color? Apparently not. In fact, Home Depot makes it clear that once bought, custom paint colors are not returnable. Here’s the wording from their website: “Custom made items and custom/tinted Paint department products cannot be returned.” I think this is fair, as it is a more equitable sharing of the risks involved.

    But there’s another issue here: no matter what a company’s returns policy is, the costs are often parsed into the selling prices that others pay. A company that has a “liberal” return policy will likely have higher costs to defray in that manner. That means, effectively, that every customer pays for the the ill-considered purchases and returns abuses that other customers commit. That seems unfair to me. In that sense, I might favor a vendor that has restrictive returns policies if I believed that those policies preserve the lower prices that I pay.

    In any case, if you have a source for the statistic I mentioned in the beginning of my comment, I would like to dig into this some more.

    –AR

  2. Hello Andrew – Thanks for the excellent comment. I pulled the recent stat from http://ow.ly/W6ufX. There are others that reflect similar numbers. To summarize one of your comments, the consumer ultimately pays for liberal returns. Totally agree. That is why you pay a little more for the service, which includes returns, at higher end retailers – or even mid-level retailers – such as Nordstrom, Zappos, etc. So, here are a few thoughts. Liberal returns show you have confidence in your merchandise and you are customer focused. The best companies are making deals with their suppliers to accept returns. I don’t disagree about the custom orders, such as paint, but I might show flexibility if the situation warrants it. Finally, I hate to see all customers penalized for the very small percentage of people who take advantage of the return policy. When I was in retail (many years ago), I remember that the founder of the company used to say that customers will take advantage of us. Good news is that there aren’t many of them. So, let’s not let them ruin it for everyone else.

    Thanks again for your thoughtful comment!

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