Learn more about the processes, initiatives and habits of enterprise businesses, and how you can adapt those processes to help your small or medium business run better.
For many small businesses, the idea of a generous return policy can seem nerve-wracking when it comes to their bottom line. Whether it’s the idea that unscrupulous customers will take advantage of it via the storied “loan” from a store (buying something, using it, and bringing it back), or the idea that too many returns will wreak havoc on your cash flow reporting, many SMBs traditionally have stuck to more conservative return policies in the past.
But today, that’s slowly changing. With the advent of the internet and ecommerce, a good return policy has become a main factor for many customers visiting the virtual shopping mall.
And the reasons so are obvious: contrary to the in-store experience where shoppers get to view, touch, and try on a product, shopping online doesn’t offer access to those decision variables. So, trust in the ecommerce retailer to do right by customers if there’s something off about a shopper’s purchase is imperative to building building trust in a brand.
Take Zappos for example. The online shoe retailer opened in 1999 with a generous return policy and doubled sales every year for at least their first eight years. In year 10 they sold to Amazon for $1.2 billion. And the craziest thing about it? Zappos found out that their most valuable customers where those that returned half their orders.
But it’s not just online retailers that have seen success with generous return policies. Traditional brick-and-mortar retailers like Nordstrom and LL Bean have grown excellent reputations and loyal customer bases by offering liberal return policies.
Whether in-store, or online, the aforementioned companies have found that a generous return policy does two things:
First, a generous return policy creates trust—a crucial element to any business transaction. Many people experience purchase anxiety—especially on more expensive items. But a generous return policy shows customers that you stand by your products and service, diminishing those fears of buyer’s remorse that many customers experience.
Second, a liberal return policy encourages buyers to purchase more things more often. Like the Zappos example above, a good return policy encourages shoppers to spend without thinking—because they know that if something doesn’t fit or isn’t right, a return is no problem. This kind of great service encourages brand loyalty, and encourages shoppers to return down the road to make another purchase another time because of a smooth return process.
Sure, you think. Easy for these big companies with extensive infrastructure to handle, but what about the little guy like me?
While there are certainly costs associated with a generous return policy, many retailers have found these kinds of return policies to be a net positive when it comes to sales and customer loyalty.
But those costs are also exceptionally manageable for SMBs, thanks to today’s integrated, customizable point-of-sale systems.
With apps like Clover Insights, managing returns is a cinch. Being able to track returns and exchanges with ease while providing easy access to data that predicts how much of your product will be returned in a given period, anticipating cash flow—even with a generous return policy—puts powerful data at a proprietor’s fingertips.
It seems clear, whether you do business online or in-store—or both—and you’re looking to build trust, loyalty, and sales, that perhaps adding a stellar return policy is the way for your business to stand head and shoulders above the crowd and create a valuable, loyal customer base that can drive your business for years to come.
With multi-million dollar companies like Zappos, Nordstrom, and LL Bean doing the same, it’s certainly worth considering.[image: shop by zoetnet on flickr]