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How returns policies can increase customer loyalty

A woman packages up a product for return at her dining room table.

Now 'tis the season for returning gifts. Returns annually reach their peak just after the holidays, putting even more pressure on retailers to get it right.

Regardless of the season, sales and customer retention are given a boost by an easy-to-understand policy and easy-to-complete returns process, according to a recent UPS study. Not only can the right returns policy reduce costs for a retailer, it also improves the customer experience and increases the likelihood that an infrequent, low-value customer will become a frequent, high-value one.

Sixty percent of online shoppers say free return shipping is a key element of a best returns experience.

Yet, the UPS study found that only 65 percent of shoppers are satisfied with the ability to process a return/exchange online. "A clearly worded, easily accessible policy is a positive for consumers on their path to purchase," says Jim Brill, reverse logistics marketing manager at UPS.

One example of the benefits of a customer-friendly return policy for online retailers is Zappos. The online shoe retailer offers unlimited free returns on any product and, according toFast Company, realized years ago that their most profitable customers are also the ones with a 50 percent return rate.

Passing the cart-abandonment test

Online shoppers are definitely attuned to the differences in policies. According to another UPS study, Rethinking Online Returns, more than two thirds (68 percent) of online shoppers say they check an e-commerce website's returns policy before making a purchase. Further, 15 percent shoppers say they have abandoned a cart when a return policy is unclear.

"Your client base needs to know where you stand on returns, in terms of what you will do and not do," Brill says.

Crafting a customer-friendly returns policy

Based on the research and decades of experience working with retailers, Brill states that customers prefer return policies that:

  • Are clearly worded, simple and short
  • Use a customer-friendly tone
  • Avoid legalese
  • Differentiate between returns and exchanges
  • Are easy to find (typically at the top of the website and in multiple other places)
  • Clearly specify a warranty period, a returns period and an exchange period
  • Provide an 800 number for support
  • Offer return-specific links and FAQs

What makes a great customer experience?

Customer experience is the great differentiator for retailers, and returns are a crucial touch point for today's demanding shopper. According to the UPS shoppers' study, here are a few key elements:

  • Ease of use: 44 percent want access to an easy-to-print return label in the original box, while 34 percent want a label right in the box
  • Free shipping: 60 percent indicate that free return shipping is a key element of a best returns experience
  • Store returns option: 58 percent of online shoppers prefer to return items to a brick-and-mortar store when given the choice

Using returns to increase the lifetime value of the sale

Savvy retailers appreciate the long-term value that a generous, easy-to-use returns program offers. For example:

  • Save the sale: 66 percent of those making an in-store return made an additional purchase when returning in store, and 44 percent made an additional purchase when processing a return from a website, according to the UPS shoppers' study
  • Customer loyalty: When a return policy is easy and lenient, customer revenue and loyalty can increase roughly 21 percent

To learn more about returns, visit ups.com/returns and click here to download Volume 5 of the 2017 UPS Pulse of the Online Shopper.

For the 2019 UPS Pulse of the Online Shopper Report, download here

Find Out More

  • Simplify customer returns.

    UPS Returns® services provide you with a streamlined, cost-effective way to provide fast and easy returns for your customers. 

    Learn more about UPS Returns
  • What is reverse logistics?

    Better manage and re-integrate your returned materials for streamlined practices, reduced waste, and continuing profits from your existing products.

    Learn more about Reverse Logistics and Post-Sales Services
  • Get in sync with today's online shopper.

    The UPS Pulse of the Online Shopper™ study provides insights into online shoppers’ behaviors and preferences.

    Download the Study
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