Practical Ecommerce

Using the Return Policy to Convert Shoppers into Customers

It’s common practice to focus on trends, design and shopability to (hopefully) increase and maintain sales. For the most part, these topics play a major role in a site’s sell-through rate. Let’s not, however, overlook the less obvious reasons shoppers may be abandoning your online store.

Your return policy can make or break a sale all on its own. Consumers want to feel comfortable about their purchases, and part of that comfort is knowing they can reach out to you if there’s a problem.

Fact: Returns and Exchanges Are Part of Doing Business

It’s true — just ask any brick-and-mortar store owner. Should you be factoring returns, exchanges, damages and such into the cost of doing business? Definitely. You should also be incorporating return policies into your on-site marketing strategy.

Is Your Return Policy Squashing Sales?

Many online shoppers don’t take time to read the fine print, and others simply don’t care because merchant account rules favor the cardholder. Still, there are plenty of seasoned shoppers who won’t hesitate to bail on a purchase if the policies are too strict.

I recently analyzed a store for a company eager to increase conversions. The owners touted their products as superior, priced best and of higher quality. The return policy, however, was riddled with threats, using terms like “We will refuse any package without an RMA.” and “If it’s your fault, we will deduct a 50% restock fee.” In short, they wanted to make people feel all warm and fuzzy via navigational graphics, but wanted to stick it to the consumer should there be any problem with an order.

It’s not so much about what’s not mentioned up front as what’s actually advertised. “Satisfaction Guaranteed” is a selling point. Of course, in order to hype this throughout the site the written policy itself must follow suit.

7 Pointers for Developing a Return Policy

Keep these key points in mind when writing (or revamping) your store’s return policy:

  • Avoid threatening verbiage. Customers need to know you’ll be just as glad to help them exchange an item as you are to charge their credit card. Avoid words like must and required, and phrases like, “We will not be responsible” and “We will refuse”.

  • Know the law. Once you accept a package (prior to opening), you’ve accepted a return. Thus, a return merchandise authorization (RMA) simplifies the process, but rarely can you refuse a refund or exchange if the customer returns a package without an RMA.

  • Be prepared to eat the cost for your own mistakes. If you shipped the wrong item, or packaged it poorly, you should be willing to eat the return ship costs.

  • Choose words carefully. Avoid being called a bait-and-switcher by being clear about your policy both in hype (graphics or spotlighted summary text) as well as the complete policy.

  • Don’t copy and paste. I’ve read the same return policy on hundreds of online stores. Even worse, I’ve had store owners tell me, “Oh, yeah, we copied that from [another site] but we plan to change it for us.” Policies are rarely one-size-fits-all.

  • Educate your staff. Your employees should understand the store’s policies. Customers should be provided with the same information no matter how they contact you.

  • Forget the legal jargon. Shoppers need to understand what to expect. Anything that needs multi-syllable, difficult-to-understand words should instead be explained in layman’s terms that everyone is familiar with.

And remember, if you change your return policies, the change is only valid from its date of publication. You can’t change the rules after an order is already placed.

The More Liberal, the Better

Zappos is popular for many reasons, a major one being its very liberal return policy. The company accepts returns up to a full year after the purchase date. While it’s difficult for any small business to compete at that level, most consumers just want the ability to send back items that don’t meet their expectations in a reasonable amount of time.

Pamela Hazelton

Pamela Hazelton

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  1. Elizabeth Ball May 24, 2011 Reply

    There may also be an element of "groupthink" in reducing returns where if enough peope rave about the product that the few unhappy customers who exist, think they – not the etailer – made the mistake, and therefore decide not to return the item.
    Apparently, adding customer product reviews to your website has been proven to cut product return rates, and if you have at least 50 of them, it reduces product returns by 65%…

  2. Ed May 24, 2011 Reply

    Very good points. And yes, policies vary by industry, so make sure you’re in line with your competitors. My policy started out as a simple "We’ll do anything to make it right" type of policy, but reality set in over time. Unfortunately there are customers who will attempt to take advantage (such as those who order several items from multiple companies to do comparison shopping). I make custom jewelry, per individual order, so it’s not a matter of placing a returned item back on the shelf. Each business is unique and you have to evaluate the potential losses against the potential for increased sales. Even Nordstrom and Costco have tightened up their "no questions asked" policies due to abuse.

  3. Christopher Rose May 24, 2011 Reply

    Although Zappos returns policy is better than most, the main benefit is in the free shipping of returns.

    The 365 days thing is a great bit of PR, but as the policy is actually that the product has to be in its original condition and packaging, the chances of any shoes being returned after a year is almost certainly zero.

    As shipping in the USA is not that expensive, the actual cost of this seemingly wonderful returns policy is probably negligible, particularly in comparison to the fantastic PR benefit it has generated for them.

    Personally I am annoyed that they only ship goods within the USA alone, which seems incredibly provincial these days.

  4. Christopher Rose May 24, 2011 Reply

    Ed: You are not required to accept returns at all on customised items due to their one off status and should make that very clear in your sales process.

  5. Kevin May 24, 2011 Reply

    Ed: what policy do you use now? Or do you just do it on a case-by-case basis? That seems like it would be difficult for customer service to manage.

  6. Carl March 23, 2014 Reply

    Great article!

    What zappos did is a classic “Risk Reversal” strategy to make the customers feel that they do not have a risk of making the purchase.

    Actually, only if most sellers implement a quick returns management system and make it really obvious for customers then that feature alone can help remove buyer’s remorse.

    Here’s what sellers specially those with online presence must do right away. rollout a returns management system similar to this popular system – immediately your site’s reputation will get better. Other than a sophisticated returns processing, you can also get a much better idea of what items tend to be most problematic.

    in addition, giving customers unexpected benefits would really help. zappos is also doing this by shipping orders much faster than the customer originally expected.