How to Write a Profitable Returns Policy

Published on August 21st, 2009 by Mitchell Harper

About the Author Mitch (@mitchellharper) is the co-founder and CEO of BigCommerce. Way back in 2007 he built what eventually became BigCommerce as you know it. Today he runs the company alongside Eddie and along with our 100+ team members, is passionate about helping businesses succeed with e-commerce. Mitch spends time between our Sydney and Austin offices and is giving the keynote at TechConnect 2012 in Sydney on April 19th.

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Returns policies are extremely important when selling online. If you sell expensive products or if you’re a new store looking to build up your customer base quickly, the best thing you can offer new customers is a lenient returns policy.

In this post we’ll look at a few things which should be included in your returns policy. If you’re using shopping cart software that doesn’t let you create or display a returns policy, give BigCommerce a try – it has a built-in returns policy which can be customized as required.

Anyway, on to the list:

1. The longer the returns period, the greater your sales. Most online stores have a returns policy that expires after 30 or 60 days, but what if your returns policy lasted for 90 days, 120 days, 365 days or even for a lifetime? Buying online is all about risk for most people. They’re thinking to themselves “If I buy from this website and things don’t work out, will I lose my money or can I trust them to honor their returns policy?”. Extending your returns policy for as long as you can will make more than it will cost you, because the overwhelming majority of your customers will NOT act on your returns policy – they just want to know it’s there for peace of mind before they place their order.
2. List all conditions and be up front about them. If you’ll only accept returns to a certain address or when the box is marked with particular details about the item being returned then mention that up front and provide examples to help your customers out should they ever need to return something to you. Ideally, however, your returns policy will have few (if any) conditions attached to it.
3. Include testimonials from refunded (happy) customers. If customers do return an item and there’s really no other way around it then be cheerful and friendly about it. Process the return immediately and ask for a testimonial about their experience. Take their testimonial (and name+photo if you can) and add it to your returns policy page. When shoppers see the testimonials they’ll be even more likely to whip out their credit cards and buy from you.
4. Offer store credit instead of a cash refund. Depending on what you sell, a lot of returns can be because the customer simply chose the wrong model number or product size. Because of this you should include two options in your returns policy: a) a cash refund or b) the issue of store credit. If the customer wants a cash refund then of course you should give it to them, but a surprising number of customers will be just fine with a store credit.
5. Find any problems and fix them. This might sound obvious, but you should always ask the customer why they’re returning an item they bought from you. Keep a list of reasons and if you spot any trends then try to stop the problem in its tracks.
6. Promote your returns policy like crazy. Most of your competitors wont even publish a returns policy, but if you’ve listened to the tips above and you sell good quality products then you should promote your returns policy everywhere you can: on your home page, on your shopping cart and checkout pages and even in your newsletters and promotions. Remember, winning your shopper’s trust can send your conversion rate soaring through the roof!

Hopefully these six tips can help you craft a compelling returns policy for your online store. Take a look at the Zappos returns policy for an excellent example of how it should be done – and for some ideas of your own!

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