News From Terre Haute, Indiana


January 27, 2013

Business Cents: The advantage of simplifying returns

When you are providing a product, it is imperative that you have a return policy. It is one of those must-haves, even though as a retailer you never want to have unsatisfied customers. When you are creating your return policy, there are a few things to keep in mind. First, you must remember that a good return policy actually will retain customers and increase customer loyalty to your business.

1. Make the return policy easy to find. Nothing is more frustrating to a customer than not being able to locate what the company return policy is. Often companies believe that making the return policy harder to locate will discourage customers from returning an item; that is not the case. In addition, it also creates additional work for the company employees and can ultimately decrease morale and productivity among employees.

2. Give the customer plenty of time. It is almost like a psychological effect — the longer the time frame to return, the less that is actually returned. In addition, you will often see an increase in overall sales for the extended period of time. Many companies have expanded return policies to 60-90 days. Zappos actually has a 365 day return policy.

3. Don’t over complicate things. Be simple and straightforward when explaining the conditions of the return. For example, if the customer has a receipt, under what conditions do they get cash back or a store credit? Same thing if the customer doesn’t have a receipt: under what conditions is a store credit or cash back granted? Recently I returned an item back to the Gap and did not have the receipt, but I did have the card with which I purchased the item. They were able to issue a credit by simply swiping the card and identifying the transaction. It made my return very simple.

4. Also try to get feedback from your customers. Customers, both happy and unhappy, will provide you with feedback on their experience. Use this feedback to improve your return policy and your customer service. In today’s society, customer service is very important. Consumers want to feel special and catered too, and the more you can make them feel special, the more likely they are to return and be regular customers.

In summary, when you develop your company return policy, be sure to keep it super simple. By simplifying the policy you will retain employees, increase productivity, increase consumer loyalty — and most likely increase overall revenue for the business.

Heather (Penney) Strohm is the regional director for Indiana State University’s Indiana Small Business Development Center.

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