Create a Return Policy That Yields Many Happy Returning Customers

create a return policy

While returns are often something of an afterthought for retailers, for customers they can be a make-or-break moment.  “Make” as in “your chance to make another sale.” “Break” as in “breaking up with your store because returning stuff is such a pain.”

How can you create a return policy that works for both your business and your customers?

Assess Costs

If too many items get returned, the cost of processing returns can eat into your profits.

Assessing the average cost of a return in terms of time and manpower for processing and restocking as well as any bank processing fees you will have to pay can help inspire you (and your team) to work to prevent returns in the first place or transform them into new sales opportunities.

Be Flexible

If you have an eCommerce component to your physical store, be sure you offer customers the option to return items purchased online to the physical store.

Customers often prefer this because their account is credited immediately and they can be certain the return was received, instead of sending several hundred dollars of product back in the mail and hoping for the best. The bonus for you is that every in-store visit is an opportunity for the customer to buy more.

Make sure your employees are trained to handle returns of online purchases quickly and efficiently.

Consider the Competition

When setting your return policy, assess your direct competitors’ policies and those of customer service leaders (such as Nordstrom for example).

Today, the general trend is toward very lenient return policies. If your POS system tracks customer purchases made with credit or debit cards, for instance, it’s easy to accept returns without receipts.

However, it’s also fairly common to set policies such as:

  • A time limit for returns: 90 days is pretty standard, but depending on your industry, you may want to set a shorter window (such as 30 days) for items such as apparel or electronics that quickly become out-of-date and are hard to resell.
  • Returns in like kind: You’ll generally want to give cash returns only for cash purchases and to credit accounts for debit or credit card purchases. For gifts without a receipt, it’s common to offer in-store credit or gift cards.
  • Standards for returns: Again depending on your industry, you might set a standard such as electronics or cosmetics being returned unopened in original packaging, or clothes being returned with tags on and no signs of wear.
  • Exceptions: You might want to implement a no-return policy for items on final clearance sale or “as-is” items.

Make Sure Employees and Customers Know Your Return Policy

Clearly post it in several places near your checkout counter, print it on receipts and post a link to it on your website’s home page.

Also have employees point out the return policy before customers buy. For instance, they could say, “Please hold onto the receipt in case you want to return the item. You can return it for full credit in the next 90 days as long as you have the receipt.” Or “For electronics, our return policy is 30 days.”

Teach Your Team to Transform Returns Into Opportunities

Any time you get a customer back in your store, it’s good news. Even if they’re returning a purchase, it’s a chance to get them to make an exchange instead and buy even more or build a relationship.

To make the most of returns, be sensitive to customer needs. Always ask the reason for a return and base your approach on the response. Is a customer irritable because a product didn’t meet their expectations? Are they tapping their foot impatiently, wanting to get in and out quickly? Did they buy three pairs of the same jeans in different sizes and keep one while returning the other two?

Then don’t try to upsell or suggest a replacement product – you risk annoying the customer even more.

However, if a customer seems in a browsing mood or confides “Gee, I was really hoping this would work out,” that’s the time to suggest alternative products the customer may not have considered. Offer to find a different size or color, or ask if the person would like to look around for a replacement item to exchange.

Consider having a mobile returns station where employees use tablets to handle returns. That way, they can move around the store to show customers other options or upsell alternative products that might work better.

Be Nice

We’ve all had the unpleasant experience of feeling like a salesperson is mad that we’re returning something. Never let that happen in your store. Even if the customer is rude or grumpy about the product, ensure your team is polite and helpful throughout.

Shoes Photo via Shutterstock


Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.

4 Reactions
  1. Yes. A return policy will help your customers feel protected and it will also show that you are looking after the welfare of your customers and not simply trying to extract money from them.

  2. I like the part you mentioned where customers can return an item to a physical store though they purchased it online. I’d add to that by saying there shouldn’t be too much of a queue either. I find that with some stores, the return queues can be quite long, slow, with just one member of staff handling it.

  3. as a big contractor in my state for 50years i rarely need to do returns. however my local ACe Hardware i bought $9.000 from last year has quietly gone to no cash returns on still instock items with the proper receipt when you paid cash originally.. for anyone.they now just give store credit only. hmmmmmm
    makes you wonder if they are thinking of closing. wow where would my store credit be if they closed?????