As more customers shop online, retailers are seeing their returned products skyrocket. In 2021, retail returns jumped to an average of 16.6% versus 10.6% in 2020, according to data from the National Retail Federation and Appriss Retail.
Returns refer to the process of a customer bringing back a purchased item to the retailer in-store or sending it back to the e-commerce business. Returns can happen for a variety of reasons. The product may be defective, or the retailers may have sent the wrong item. Or, maybe the customer changed their mind or is dissatisfied with what they received.
Returns are an integral part of the customer service experience and can significantly impact the reputation and success of a business.
Handling returns effectively can help to improve customer satisfaction. When customers can return products easily and quickly, they are more likely to be satisfied with their overall shopping experience.
And when customers know that they can return products easily and without hassle, they are more likely to do business with the same company again in the future. Note that more than 70% of customers say they are unlikely to return after a bad delivery experience.
Likewise, handling returns effectively can help to reduce costs. Implementing a structured, organized returns process allows retailers to avoid the costs associated with lost inventory, damaged goods, and customer service issues.
This guide will break down everything a business owner needs to know to create a streamlined, efficient returns process — starting with creating a returns policy that makes it easy for customers.
Understanding Return Policies
A clear customer returns policy can save your team and customers a lot of time and frustration.
Specifying the terms and conditions for accepting a product return can build customer trust. When someone knows what to expect from your business when they need to return a product, they are likelier to trust your business.
However, if a customer is unclear about a business’s return policy, it can lead to confusion and frustration, negatively impacting their perception of your business. Clear return policies reduce the likelihood of misunderstandings and help customers feel more confident in their purchase decisions.
Plus, a clear return policy saves your e-commerce business time and money. Efficient returns management can help businesses reduce the cost of handling returns by streamlining processes, identifying patterns of returns, and reducing fraudulent or abusive returns.
Clear return policies can also help lower customer service costs by mitigating customer inquiries about returns.
Elements of a Good Return Policy
The goal of your returns policy is to help ensure that all customers are treated fairly and consistently, regardless of the reason for their return.
Consider these elements while creating your returns policy to build customer trust, encourage repeat business, and protect the business’s reputation.
Clear and Concise
Customers should know what to expect when they return a product without reading through pages of fine print. Overcommunicate your returns policy to increase visibility to customers shopping on your site.
Make sure shoppers know whether you offer free returns, the steps in the returns process, and any deadlines (such as returns and exchanges are only available 30 days from the date of purchase).
Fair and Reasonable
Your return policies should be fair to both you and your customers. Make sure that they are reasonable and that they do not put an undue burden on either party.
Set a reasonable deadline by which someone needs to send in a return or exchange, accounting for mail delays and possible supply chain issues.
Customer-friendly
Empower customers to provide feedback quickly, ask for a return or exchange, and get a prepaid label.
Avoid using jargon or technical terms that customers may not understand. Remember that according to one survey, more than 50% of respondents would avoid buying from a company with strict return policies.
Consistent
Your return policies should be applied consistently to all customers. This will help to build trust and prevent customer frustration — or worse, accusations of discrimination.
Transparent
Make it easy for someone to find your return policy on your e-commerce site. Consider creating a branded portal dedicated to the returns process to make the experience easy and consistent with the rest of your customer experience.
Common Mistakes to Avoid when Creating Return Policies
Retailers make several common mistakes when creating their return policies, which can lead to high customer turnover, increased costs, and lost sales.
Here are some of the most common mistakes.
Being Too Restrictive
If your return policy is too restrictive, customers are less likely to buy from you in the first place.
For example, if you only accept returns for unopened items, you’ll lose out on a lot of sales from customers who want to try something on or use it for a short time.
Likewise, setting a strict time limit for returns can also cause online shoppers to hesitate to click buy.
Having Vague or Unclear Terms
Customers should know exactly what they need to do to return their online purchases, including the time frame they have to return it, what documentation they need to provide, and how they’ll be refunded.
Failing to Communicate the Policy Clearly
If a return policy is complicated, hard to find, or difficult to understand, customers may be hesitant to purchase or dissatisfied with the return process, leading to negative reviews and lost sales.
Ignoring the Customer Experience
When a customer has a question about your return policy, they should be able to get an answer quickly and easily. Answering customer inquiries is a key part of the customer experience.
If someone has to wait days or weeks to find out about their online return, they’re more likely to give up and keep the product.
Not Considering the Costs of Returns
Some online retailers neglect to factor in return costs to their bottom line. While offering free returns is excellent for the customer, there will likely be a tradeoff for your online store.
Retailers should take a hard look at when they can feasibly afford to offer customers in return for their trust and brand loyalty. At the end of the day, most customers care about the way you treat their relationship — and less about free perks.
Managing Returns Process
A return policy is just the first step in the returns experience. A retail policy is only as strong as the process that follows through with what the policy promises.
Retailers need a clear and easy-to-understand return process that is customer-focused and designed to minimize friction.
Even if a customer complains about the product, there are still ways to salvage the relationship. Ensuring they have a good return experience with your brand can help remedy even the most frustrating situations. Follow these steps to process returns expeditiously.
- Collect necessary information: When a customer initiates a return, it’s important to collect all the necessary information, such as the reason for the return, receipt or order number, and item details.
- Inspect the product: When the returned item is received, it should be inspected to ensure it meets the return criteria and is not damaged or used.
- Determine the type of return: Is it a controllable or uncontrollable return? Controllable returns result from factors within the company’s control, whereas uncontrollable returns are due to customer preference or damage during shipping.
- Take the appropriate action: Based on the reason for the return and the item’s condition, determine the appropriate action to take according to your returns policy, such as issuing a full refund or exchange or rejecting the return. Make sure to provide return labels to the customer if appropriate.
- Process the refund or exchange: If a refund or exchange is approved, process it as quickly as possible to avoid delays and ensure customer satisfaction.
- Update inventory and records: When a return is processed, it’s crucial to update inventory and records to reflect the transaction accurately.
- Follow up with the customer: After processing the return, follow up with the customer to ensure they are satisfied with the resolution and address any remaining concerns or issues.
Ideally, you will provide real-time updates to the customer as the process is ongoing. A tool like RichCommerce can help: through our platform, e-commerce retailers can keep customers in the loop regarding their return with a customized email for every process step.
By following these steps, businesses can effectively manage the returns process and ensure that their customers are satisfied with their purchase experience, even if they need to return or exchange a product.
Addressing Customer Concerns
As previously mentioned, there are many reasons why a customer might initiate a product return. Identifying and addressing the issue as quickly as possible is important to ensure the customer feels valued. Meeting customer expectations set by Amazon is no easy feat.
Consider the customer’s perspective when addressing their concerns. Whether a product was damaged, did not meet their satisfaction, or never arrived, returning it can spark additional anxiety and annoyance.
Here are some issues a customer may have when starting the returns process.
- Customers may worry that they won’t be able to return an item if it’s not the right size or doesn’t work as expected. This fear can be heightened if they’ve had bad experiences with returns.
- Customers may not be sure what the return policy is for a particular product or store, leading to confusion and frustration.
- Customers may be worried about meeting return deadlines, especially if they are tight on time or live far away from the store.
- Customers may be unhappy about paying shipping and handling fees for returns, which can add up quickly.
- Customers may be dissatisfied with the refund amount they receive, especially if it doesn’t cover the full cost of the item.
Stepping into your customers’ shoes can help you better understand some of their pain points. Here are some strategies for alleviating those pain points and helping the customer feel confident in your returns process.
Strategies for Addressing Customer Concerns Effectively
The best tip for addressing customer concerns is to lead with empathy. Empathy allows you and your team to build trust and rapport with the customer, making resolving the issue easier.
Remember that it takes strong customer service skills to resolve customer concerns about returns in a professional, helpful, and positive way.
Listen Actively
Before you decide whether to issue a store credit or refund their return, listen actively to the customer’s complaint. Customers returning a product are likely to be frustrated, so it’s important to be patient and understanding.
Active listening requires paying careful attention to the customer and letting them say what they need to say before you move on.
Show Empathy
A little empathy can go a long way. By showing empathy, you can demonstrate that you understand the customer’s perspective and are willing to help them find a solution.
This can help to diffuse any frustration or anger the customer may be feeling and turn a negative experience into a positive one. Some people need to know they’ve been heard and understood!
Take Ownership
Sometimes, customers will have a legitimate reason for returning a product. Take ownership if a mistake was made, such as the wrong product being sent or a defect not caused by shipping.
Being accountable to your customers will make you stand out among your competition: if you’re willing to go the extra mile to help the customer, they’re more likely to be happy with your business.
Provide a Solution
Customers want you to walk the talk: when something goes wrong, do what you must to to improve it. Your solution could be to offer store credit, accept free returns, issue a full refund, or provide a gift card to the customer.
What if the customer is trying to get a freebie from you? A satisfied customer is likelier to return to your business and recommend it to others.
On the other hand, an unhappy customer is more likely to take their business elsewhere and spread negative word-of-mouth.
Yes, offering store credit and free returns costs money. But letting an angry customer storm off typically costs even more.
Learn from the Experience
Keep track of the number and type of returns you see to understand if there’s a pattern. Maybe you need to find a new shipping partner or one of your products is too delicate to ship long-distance. Understanding how customers prefer to receive their refund can also help you lower the cost of returns over time.
Ultimately, the best return is the one avoided altogether. While it’s impossible to eliminate returns completely, there are steps that retailers can take to prevent returns from stifling long-term growth.
Preventing Returns
Great quality products and accurate product descriptions are essential for preventing returns and ensuring a good customer experience from start to finish. Customers who receive a product that matches their expectations are more likely to be satisfied and less likely to return it.
Minimize returns by implementing these strategies to ensure customers are happy with the final product they receive.
Test your products thoroughly before selling them.
Ensure your products meet a high-quality standard by testing all new products before sharing them with your customers. This will help to identify any potential defects or problems.
Consider conducting quality control checks before shipping to identify and address potential issues before they reach the customer.
Provide detailed product descriptions.
One of the best ways to minimize returns is to provide accurate and detailed product descriptions that accurately reflect the product’s features, dimensions, and other important details.
Providing high-quality images and videos can also help customers better understand what they are buying.
Provide excellent customer service
Returns management starts before someone buys the product. Create a customer service team that’s on hand to answer any customers’ questions before they purchase from you. Create a detailed FAQs page to help the customer find answers to their questions.
These resources can help customers set their own expectations and order the correct product type to fit their needs.
Improve your inventory management
Returns in good shape can be restocked as inventory and sent to new customers. This helps you avoid restocking fees and other reverse logistics costs.
But you need the right system to adjust your inventory purchase orders accordingly so you don’t end up with too much of one item.
Implement an inventory management tool that can adjust automatically when there’s a high rate of returns for one product.
Offer a satisfaction guarantee.
This will give customers peace of mind and encourage them to buy from you. “100% satisfaction or your money back” may impact your shipping costs but can also increase your sales.
Quality-check your product, offer plenty of information so a customer can make an informed decision, and there’s no reason to guarantee they won’t be satisfied.
Bottom Line
Handling returns can be a delicate dance. On the one hand, you want to keep costs low and avoid paying return shipping altogether. On the other hand, you want to offer free shipping to satisfy your customers and avoid negative reviews. Finding the balance between those opposing business objectives can be tricky.
The solution starts with a solid and clearly-communicated returns policy. This, coupled with excellent product marketing — including product descriptions and high-quality images — can help customers confidently navigate their checkout and returns decisions.
A tool like Rich Commerce can optimize returns management and help merchants keep their costs down.
Learn more about handling returns and why Rich Commerce stands out among other software providers.