Looking to Retain Your Customers? Offer Free Returns

Richard Clayton

June 7, 2019

According to a recent study by Klarna, sellers all over the world might be taking the wrong approach when crafting their return policy.

Let’s face it. As a seller, the last thing you want to hear is that one of your customers isn’t happy and is returning your product. Returns eat into profits and increase your inventory, which is why so many businesses actively work to limit a customer’s ability to send back their purchases.

But what if taking the opposite approach, i.e., using a flexible return policy, improved customer retention, increased positive word-of-mouth and boosted sales? Those were several of the Klarna study’s conclusions, which fount that:

75% of shoppers say that an easy return policy is highly important when choosing a retailer
78% of shoppers would buy more over time at a store that offers free returns
86% of shoppers would be more loyal to a store that offered free returns

This study helps highlight something experienced sellers have known for a long time – the more accommodating you are to your customers, the more likely you’ll get repeat business. Here, we’ll be talking about the best ways to update your return policy, as well as other strategies for increasing customer loyalty.

Boost Retention With a Flexible Return Policy

Your return policy is key to increasing customer satisfaction. While offering free returns or altering your policy might set you outside of your comfort zone, it’s a necessary step for attracting new customers and creating repeat business.

There are several steps that you can take to optimize your return policy:

Increase Return Times

When it comes to building customer trust, it’s important to demonstrate that you have faith in your product. One way to accomplish this is by increasing the time customers can take to return their purchases. Going beyond the typical two-week return window conveys to your customers that they’ll be satisfied with their purchase in the long-run.

Additionally, studies have shown that a longer return window reduces actual returns. When customers have more time to make a return, this triggers what researchers call the endowment effect, which states that “the longer a customer has a product, the more of an attachment they form with it — meaning they’ll be less likely to return it.”

Offer Free Returns

For retailers, offering free returns is the ultimate display of confidence that your product will stand the test of time. Giving your customers the ability to send back an item they aren’t satisfied with helps build trust in your brand, increases the likelihood that they’ll spread the word to their friends and family and makes them more comfortable with returning to your store.

Sure, you’ll have to cover some additional shipping costs and you might see an uptick in your inventory once your free return policy is implemented, but the investment in your brand and reputation is likely to pay off in the long-run.

Easy Shipping

Make shipping back returns as pleasant and efficient as possible. One way to accomplish this is with pre-printed return labels for items sent back through the mail. According to a UPS survey, 52% of people say that including a pre-printed return label in their delivery is a key element of a good returns experience.

Additional Ways to Build Customer Loyalty and Reduce Returns

While having a flexible return policy is important, it is by no means the only way to build customer loyalty to your business. Additional steps you can take include:

Accurate product descriptions – According to the same Klarna study mentioned above, 81% of shoppers said that better photos and descriptions would help reduce the “false expectations effect” and consequently the amount they return. In short, send your customers what they expect to receive, and they’ll be less likely to return their products.
Warranties – Warranties demonstrate that you have faith in your products. Offering extended warranties assures your customers that you’ll be there in the long-term, making them less likely to make a return soon after their purchase.
Responsive support – Ensuring that customer questions or complaints are answered promptly means that certain product problems can be addressed before a return takes place. Sometimes, all it takes is for a customer to feel that they’ve been treated fairly to prevent them from returning your product.

The Bottom Line

When it comes to return policies, strictness and inflexibility can have a negative impact on your business. Instead, see the opportunities that returns can bring and how they can fit into your long-term strategy.

Remember that just because you offer free returns, it doesn’t mean that your customers will automatically use the option. The idea is to show them that you value their business and that you’re willing to work with them on a personal level.

Customer loyalty — not profits — should be your number one goal when crafting your return policy. When done successfully, you’ll increase customer engagement, which in turn, can increase your bottom line.

The content provided in this article including any information relating to pricing, fees, and other charges is accurate and valid only as of the date it was published. In addition, changes in applicable regulations, policies, market conditions, or other relevant factors may impact the accuracy of the mentioned pricing and fees and other associated details. Accordingly, it is further clarified that any information regarding pricing, fees and other charges is subject to changes, and it is your responsibility to ensure you are viewing the most up to date content applicable to you. Payoneer will provide the most up to date and accurate information relating to pricing and fees as part of the account registration process. Registered customers can view this information via their online account.