Millions of transactions are made daily in today’s marketplace, so a fair and equitable refunds and exchange policy can be an effective sales and marketing tool. In a survey commissioned by UPS, 63% of American consumers check the return policy before making a purchase, and nearly 50% would shop more with retailers that offer hassle-free returns. So, it may be in a business’ best interest to ensure some kind of exchange or refund program is in effect.
“Businesses are not required to provide returns”, said Mechele Agbayani Mills, President and CEO of BBB serving Central East Texas. “However, many companies do so in the interest of maintaining customer goodwill.”
BBB provides the following useful guidelines for setting up a system to handle refunds, exchanges, and returns:
Make sure it works for you
Company management first must decide on a refund/exchange policy. In making this decision, consider the company’s suppliers and their “take back” policies, manufacturers’ warranties, and service center set-ups. State and federal laws also enter the policy picture, so your policy should be reviewed with your company attorney. The final product will take your suppliers, legalities, warranties, service contracts, and company preferences into consideration.
Keep it simple
As much as it is possible, the policy should be reduced to its simplest form so both company employees and customers quickly and easily understand it.
Make it public
Use your policy in advertising and post it in your stores for everyone to see. If possible, receipts and invoices should carry information on your refund and exchange policy, This will help prevent misunderstandings from arising in the future.
It is important that employees are trained to adhere to the policy. Instruct them not make oral promises as to exchanges, returns, refunds, and warranties that are inconsistent with the policy.
Types of Returns:
Under an exchange policy, a customer may return an item or another item of the same kind may be taken in its place. This privilege is usually extended when the buyer has made a mistake as is often the case with gifts, such as a mistake in the size or color of a shirt. However, your policy should require that the customer have a sales slip, cash register receipt, or other proof-of-purchase. The merchandise to exchange also should be in resale condition.
Returns for credit
On return of a purchased item, some companies adopt the policy of providing the customer with store credit. The customer may apply the amount on the slip to the purchase of any other items in the store. This privilege usually is extended when the retailer want to adopt a more liberal policy that a simple exchange. The policy usually specifies that the credit is for merchandise only, not cash, or merchandise and cash.
In the interest of maintaining customer goodwill, many retailers return customers’ payment in full The refund policy usually requires that the merchandise be returned within a specified amount of time and be in resalable condition. The money-back policy should carry the requirement that the customer have a sales slip or other evidence that the merchandise was actually purchased at the retailer’s place of business.
For more information on how to be a savvy business owner, or to download the Above and Beyond 2016 Holiday Giving and Shopping Guide, go to bbb.org. To network with BBB Accredited Businesses and other professionals, join our LinkedIn group or follow us on Facebook and Twitter.
Mechele Mills is the President|CEO for the Better Business Bureau Serving Central East Texas. Prior to her role at BBB, she led and consulted organizations of all sizes, managing operations, sales marketing, and personnel for both the public and private sector. She holds a Bachelor’s in Journalism/PR from the University of Texas at Tyler and a Master’s in Business Administration from Baylor University.