Restrictive Return Policy could Ruin Business

“The question is, then, do we try to make things easy on ourselves or do we try to make things easy on our customers, whoever they may be?” – Erwin Frand

If you claim to have great customer service practices, then your company should be able to confidently say that it makes the life of its customers easy. Great customer service enhances sales, boosts reputation, attracts and retains customers – overall brings a number of advantages for the company. A company’s return policy also fall under the customer service gamut – since providing service to customers does not and should not end post the sale. Customers must be able to return a company’s goods / products if they believe that it did not live up to their expectations or they found something better and at a better price. It is tough to concede that there is a product / service better than one’s own and often company’s get entangled in situations when their return policy fails to match up. Customers feel cheated and lose trust in the company resulting in no repeat business and also telling their associates of their experience and worse still posting comments of their bad experience on social media that would be seen by a much larger audience.

Many companies shy away from turning down their return policy even if it is considered restrictive because the fact is that it is an expensive practice. A return policy adds to cost, inventory and does nothing for sales figures which is the reason that many companies try to cap their losses through a restrictive return policy. For shoppers, a simple return policy is one of the major drivers to buy since they are comfortable knowing that they can return a product if they are not satisfied but for companies, too many returns can be highly detrimental to their revenue and profit figures. Customers want to be able to trust that a company will deliver on its promise and will serve them with top class customer service and it becomes the responsibility of the company to live up to that expectation at every interaction point the customer has and therefore must include the return policy.

Many companies have benefited hugely by being friendly and putting in place a customer focused return policy. They ensure that the customer can return the product as easily as they are able to buy it and this gets them a larger ‘fan’ following and who are willing to tell others about it too. A survey revealed that of the total number of users they spoke to, 91% accepted that the company’s return policy played a critical role when making a purchase. A well-designed and meticulously executed return policy works in a company’s favour to attract and retain customers and also to receive great testimonials and several referrals. It is important that a company’s return policy is clearly exhibited wherever the customer can view it – the product receipt, in-store, company website, social media and any other form of communication the company may have with the customer. Along with the return policy, the customers must know whom they should contact – name and number – in case they are particularly displeased with a product. This is a proactive method to ensure that a customer’s dissatisfaction does not become a complaint and also that your company continues to be known for its good customer service.

A robust and good return policy is equally important for ‘real’ world stores and on-line ones. In fact, when customers make purchases on-line they have no access to the physical product – the pick-up, touch and feel experience is missing and hence the return policy becomes one of the major factors for customers to shop from a particular site – it gives them the reassurance they need. In fact, a good return policy reflects the confidence and commitment of a company in the quality of their products. While it guarantees that a customer can receive a refund if they are not happy with the product, it also resounds with assurance and lends a feeling of trust. This is a great way to engage customers and display your company’s responsibility to maintaining high standards of customer service.

Those in business know that the customer profile has changed significantly – they are smarter, savvier and know exactly what they want and how to get it. It is this new ‘face’ of the customers that has goaded companies to put together return policies that are sound and fair and also that the policy is properly visible to the customers. The terms and conditions of the return policy must be clear such that the customer is able to decide whether to buy or not even if the return policy is conditional and mildly restrictive – like a 30 day period in which they may return the product. Whatever the conditions, a return policy does serve as a guarantee and it is common knowledge that customers prefer to do business with a company they can trust. Without such a guarantee, customers are wary and would much rather spend their money elsewhere. Companies do run the risk of ‘fraud returns’ too, but there are many companies (some very large retailers) that have monitoring mechanisms in place to track the return pattern of customers and a string of returns from a particular customer can help them stop the behaviour.

There is no denying that customers do expect great service and among the factors that enhance the feeling of good service is a robust return policy. A study revealed that a whopping, 63% customers said that they first check the company’s return policy before buying and at 48% were more willing to buy online if the company had a hassle free return policy. The study also revealed that at least 48% buyers would be willing to tell their friends and associates about the company that had a lenient return policy. Referrals and testimonials are those solid pillars for any company that generate more business and makes the company more attractive to prospective buyers. The number of on-line shoppers is increasing but it also means that there are many ‘novices’ and ‘first-time buyers’ who would be naturally apprehensive and a hassle free and relaxed return policy would go a long way in putting them at ease and ensuring that they become regular buyers.

So we know that a return policy is important but what does it mean when customers say that they want a relaxed and hassle free return policy? According to another study this meant that customers don’t just expect free shipping, they also want to be able to return the product without charge to them. At least 62% said that a return label with the delivery of the product would be a great way to display that the return policy is hassle free.

While customers expect a return policy, companies also have to cover their business from loss since free returns does translate to a high cost. Given this factor, it would be advantageous for companies to look at their ‘return history’ to ascertain the actual costs that they would incur with free returns. This must be balanced out with any increase in sales figures you anticipate given your easy return policy keeping in mind the kind of customers and competitors. The truth is that a customer friendly return policy works as a charm to soothe the stressed customers and it tells them that the company is willing to stand behind their products and promise of service and that the customers should feel free to make any purchase they want without feeling encumbered. Trust, security and dependability – the 3 vital aspects for any customer-company relationship that will boost sales and ensure long term success for any company! A sound and easy return policy also keeps the company on its toes – doing away with sub-standard products and below par customer service – the company knows where the losses will happen and what their far-reaching effects will be.

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