Establishing A Return Policy And A Process For Handling Returns

There are many things that can cause setbacks with a purchase transaction. While not pleasant, returns are something all companies (especially those that handle physical goods) must deal with at some point. Here are some tips for making the most of dealing with returns and exchanges.

Your Return Policy
First and foremost, the thing to do here is set a policy, if you haven’t already. Stating upfront what your terms are for handling returns and exchanges lets customers know where you stand and can help prevent chargebacks. Some important steps are:

1. Decide on the time frame you’d be willing to accept a return within (between 2 weeks and 30 days is standard)
2. Include any conditions you feel necessary, such as a restock fee or defective items only clause.
3. Clearly state who is responsible for the return shipping costs.
4. Put your policy in plain language and make it easy to find on your website.
5. Print it on your invoices to ensure customers see it.

Choose a policy that’s fairest for the customer, not the easiest on your bottom line. I say that because companies are judged more by the level of service when handling a problem than when making a sale. Consumers want a hassle-free experience and, if you offer that, they will keep coming back to buy from you.
In fact, when setting my own return policies, I err on the side of caution and almost always give the return. Well-treated customers, even if they are at fault often become deeply loyal and most willing to recommend your site to others.

The ‘Why’ of the Return
If you want to know why a customer wants to return your product, simply ask. Just don’t ask 5 times in 5 different ways (i.e. “what’s wrong with it?” followed by “when did you notice…”)…that comes off more as an Inquisition than a business transaction. Ask once and really listen to the answer. Maybe the product is defective somehow or it was a gift they did not like. Try placing a short survey on your website to ask what they did or did not like about the item they returned. Understanding the ‘why’ can help you find flaws in a product and/or give ideas for improvements. In fact, if I receive more than a few complaints about a product, it gets eliminated from my product line. Its the best way to weed out the junk products. In fact, I often forward them to the manufacturers or dealers so they can consider improving the product or credit me for returning the remaining items.

Associated Fees
Probably the most aggravating aspect of a return is the fees – merchant transaction fees and shipping costs. These extra costs can hurt the bottom line, so many companies charge a restock fee out of the refund amount, often as a percentage of the purchase amount. This helps to cover their costs, as well as avoid frequent returns (yes, this can happen).

Some companies have a policy of the shipping costs going to the party ‘at fault’. For example, if it is a matter of a customer simply changing their mind, they pay, but if it is a problem from the merchant’s end, the company pays. It is, however, a good faith move to cover return shipping and send your customer a return shipping label. This is a doubly beneficial because it’s both convenient for the customer and lets you ensure the shipping amount and method.

Exchanges
A return doesn’t always have to mean a transaction fee. Consider offering an exchange for a product of equal value, or even a gift card code good toward their next purchase. Sometimes an exchange for a different size or color is all that’s needed. This is often an acceptable method for customers and, with it, your merchant account can avoid a hit.

The bottom line on dealing with returns and exchanges is to communicate with your customers, both about the policy and during the process itself. Maintaining customer service efforts when there’s a problem is the best way to deal with them when they occur. Remember that a certain level of returns is expected, and just a part of business. Don’t be such a scrooge on returns that you forget that the customer is not able to see and feel the product ahead of time. Often stock photography does not do a good job of adequately showing the item. Ultimately, successful ecommerce businesses take care of their customers. Those that don’t do not stay in business long. You can either be a stickler for the one sale you made, or you can satisfy the customer and have the potential for many sales down the road.