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:
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.
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:
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.”
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.
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 returnin their delivery is a key element of a good returns experience.
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:
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.