Returns, refunds, and exchanges are normal when running an online business. There are countless reasons for this.
There are times when customers are unsatisfied with their order because of damage, wrong size, or when it did not look as they expected.
So they request either for a replacement or for their money back.
Understanding Return Policy and Why You need it
A return policy is the rule that you set to tell your customers what items they can return, for what reasons, and the span of time over which returns are accepted.
Getting a return request can be one of the signs of profitability loss and customer dissatisfaction.
But don’t be disheartened because we have some tips for you to make more profitable returns and exchanges.
Convert Returns into Replacements
When a customer returns a product for a refund, the business usually loses profit. However, with an exchange, the damaged is lessened and positive cash flow is maintained.
Therefore, it is a must to encourage exchanges over returns. This can be done by offering free return shipping if the customer chooses to exchange the product.
You can also kindly offer alternative products that may catch their interest and suit their preferences.
If none of this works and they are eager to get a refund, it is okay.
You can still guarantee their loyalty to your store; just ensure the return experience is as pleasant as possible.
You can thank them for having interest in the product, or maybe offer a bit of discount if they will ever purchase again next time. Probably that will change their mind and proceed to purchasing once they return.
Upsell or cross-sell During Exchange Requests
Upsell or cross-selling can happen even on exchange requests. Exchanges are commonly more profitable than returns, but it changes based on the product and its margins. If you think a particular exchange is costly, you can look into upselling or cross selling on your next exchanges.
Your shipping policy must also change for returns and exchanges.
In cases where customers have to shoulder the cost of shipping on an exchanged item, you can offer them free shipping by allowing additional purchases added to their cart.
You can push for upselling better if you know the story behind the exchange. This way you can make a personalized recommendation for a higher priced item that gives the satisfaction lacking on the first purchase.
Keep in mind to that you have to treat every exchange as an opportunity to upsell or cross sell and increase order value.
Offer product warranties
For high price items, retailers may consider selling product warranties to shoppers. Warranties serve as protection for businesses against the costs to replace damaged products and avoiding disputes over who is at fault.
Warranties can be easily sold through your website. It can even give you an added source of revenue since with warranties like these, insurance providers commonly reward a commission on all premiums sold.
This way, your customers get the protection they need for a longer term and your business gets a little extra cash instead of being charged for damaged goods.
Accept that Refunds and Exchanges are part of the Norm
Just like what we said before, encountering unsatisfied customers is a part of growing your business regardless of how much effort you exert into your customers and your products.
The turning point is in the way you handle unsatisfied customers and the way you strategize shipping of return and exchange requests, making it favorable both for you and for your customers.
Establishing a clear return and exchange policy —and regularly modifying it to make it better —is the best way to cut costs and potentially turn a negative customer experience into a net positive outcome for your business.