The Importance of a Good Return Policy

When a group of consumers were interviewed in a recent Harris Poll, as many as 91 percent responded that a store's return policy was important when making a purchasing decision. Therefore, having a well-thought-out return policy clearly displayed in your store is key to attracting — and keeping — your customers.

As online shopping becomes more commonplace, return policies become even more important. Unlike visitors to brick-and-mortar stores, online consumers don't get to see and hold the physical product before they buy it. So e-commerce sites must ensure that their return policies are fair and appealing to their customers.

Historically, the money-back guarantee was a way for retailers to stand behind the products they sold. The basic message was, "If for some reason you don't like our product, return it for the full value of what you paid for it." On the outside it is an unconditional agreement that guarantees the quality of the product being purchased. As such, return policies have been as much a marketing tool as a retail standard.

With online sales, consumers are relying on the retailer's descriptions of the products. Because of this, retailers have to give their online customers time to decide if a product is what they want. Ruby Lane, a specialty online retailer selling antiques, collectables, and jewelry, solved this problem by allowing buyers the option of returning items within three days of receipt.

A concise and clear return policy gives consumers a feeling of security; that what they are buying is guaranteed to be what it is represented to be. If a retailer doesn't give this guarantee, then consumers become suspicious and avoid buying the product.

Lately, retail businesses have begun employing methods that track the return habits of consumers. Some companies like Wal-Mart have developed their own system, while others have hired outside companies to track retail returns. The idea is to stop fraudulent people who return items frequently. The catch is to not penalize innocent customers, such as the expectant mother who receives too many strollers at her baby shower and winds up on a fraudulent return list when she tries to exchange them.

Consumer groups are pushing retailers to come up with fair return policies that are posted visibly at all purchase locations (this includes on the Web site for online retailers). Many return policies have conditional agreements, such as time limits, that must be clearly defined and expressed at the time of purchase. The consumer should know that he or she has 30 days to decide whether a product meets his or her needs or whether a store charges a restocking fee when an item is returned.

A definitive retail return policy can help increase sales because an overwhelming percentage of the consumer population places credence in it. Consumers still see it as a guarantee that reflects the trust retailers have in the products they sell.

For more on return policies for Web-based retailers, be sure to read The Return Policy: The Forgotten Fundamental of Online Sales.