The Importance of a Good Return Policy

Ninety-one percent of consumers interviewed in a recent Harris Poll said that a store's return policy was an important factor in a purchasing decision. Therefore, having a well-thought-out return policy clearly displayed in your store is key to attracting — and keeping — your customers.

A return policy is good business for brick-and-mortar stores, and it's essential to doing business online. 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. As such, return policies have been as much a marketing tool as a retail standard.

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 often become suspicious and avoid buying the product.

Retail businesses also employ 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 (including 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 looks for it. Consumers still see it as a guarantee that reflects the trust retailers have in the products they sell.