Best Practice Return Policies

Column by Rick Segel

Is it fair that someone can go into a store, buy a dress shirt, take it home, unwrap it from the packaging, throw away the wrapping, keep it at home for eight weeks rolled up in a ball, and then return it to the store, demanding a full refund? No it's not. Should the retailer give back the money? Absolutely. The customer will be happy and the refund may actually be advantageous for your business in the long run.

We live in a highly competitive business climate. Our customers have options as to where they choose to shop or do business, and choices are power. Years ago a customer would be embarrassed and/or afraid to bring an unwrapped shirt back to the local men's shop. Those days are over. The power has shifted to the consumer.

Customers don't have to be right

J.C. Penney, founder of the department store chain, said that the customer is always right. I don't necessarily agree. They are the customers — they are allowed to make a mistake. We can't punish them for not adhering to our rules or policies. You can try to enforce your rules with signs and policies clearly printed on cash register receipts. These tactics might help you win the battle, but they might also lose you the customer. Customers don't want hassle. They just won't come back.

[Customers] don't want to associate themselves with people or businesses that don't respect them.

Let me share a secret: I returned a thirty five dollar shirt recently that I had in my house for over 2 months, and not only did the store take it back but they treated me as if there wasn't a thing wrong with what I was doing. I even felt comfortable enough to spend another $325 at the store. Do you think I would have spent that money if I were treated any other way?

The real issues are trust and respect. Customers shop at stores, buy brands, and do business with only those businesses that they trust. They also don't want to associate themselves with people or businesses that don't respect them.

There is a major retailer that has been known to scold a department manager from time to time if their returns dropped below a storewide average. Their rationale is simple. The more customers feel comfortable to buy and return, the greater chance they will be keeping some of what they are buying. It comes down to a cost of doing business and the price that businesses must pay to buy confidence, trust, avoid any negative impacts, and keep up with the competition.

You should still post your signs and even try to offer store credits, exchanges, or repairs. However, in the end, be prepared to do whatever the customer wants. Will we be taken advantage of from time to time? Probably, but we can't set our policies for those people. We must focus on our customers and how they would want to be treated.

So, the next time you're faced with an unreasonable return, remember the lifetime value of a customer. How many times can those customers buy from you in the future? Remember you're not giving back money — you are buying trust.