How to Create a Refund and Exchange Policy?
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How much will a refund and exchange policy cost me?
A 1991 study by Ramsay and Enzle on the return policies of 106 Edmonton retailers, gave the following results:
- Return policies did not appear to be costly to retailers.
- Goods are often resold or returned to the manufacturer or wholesaler.
- Only seven percent of respondents discarded returned goods.
In the opinion of retailers, few sales return.
- Almost two thirds of those responding stated that one percent or less of their sales are returned.
- The respondents were reluctant to estimate the cost of providing the service to customers, but the great majority of those who responded stated that the cost was one percent or less of their gross sales.
An equitable refund and exchange policy can be just as an effective tool as advertising, promotion and merchandising. By taking constructive action, a business can turn customer discontent into greater customer loyalty. Since the long-term market value of goodwill and repeat customers may offset any immediate costs, it would appear that return policies are a negligible cost to retailers.
What elements should a good refund and exchange policy have?
A refund and exchange policy should contain at least the following information:
- the extent of the service offered
- whether you give refunds, exchange merchandise or offer other forms of compensation
- the requirements for proof of purchase
- the condition in which items must be returned to get a refund or exchange
- the length of time after purchase in which refunds or exchanges are given
- any exceptions
- final sales items
- custom-ordered goods
- items about which there are hygiene concerns (e.g. underwear or bathing suits)
- type of refund given
- for credit cards
- for cheques
Sales staff must understand the importance of the policy and respect it. Employees at the check-out counter should be encouraged to remind customers to save receipts (if that is part of your policy) so merchandise can easily be returned. Also, if special conditions apply to certain items, staff should inform customers at the time of purchase.
The policy should be used in advertising and posted in store. Notices should be near cash registers, in fitting rooms and other appropriate locations. By announcing your policy you remind your customers that they can count on you. It is also good preventive medicine against customer dissatisfaction.
Table of Contents
- Secure Customer Loyalty?
- Maximize the benefits of Customer Feedback and Word of Mouth?
- Address the needs of Dissatisfied Customers?
- Profit from Customer Service Recovery?
- Fulfill an Unconditional Service Guarantee?
- Establish a Refund and Exchange Policy?
- Adopt a Quality Management Program?
- Entire Guide