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What is a return policy?

A return policy is a set of rules a retailer creates to manage how customers return and exchange unwanted merchandise they’ve purchased. These policies tell customers what items can be returned and for what reasons, as well as the timeframe over which returns are accepted.

From Apple’s strict 14-day return policy, to IKEA's generous 365-day turnaround, just about every major retailer offers return and refund policies to their customers—and your business should, too.

Why have a return policy?

A fair return and exchange policy builds trust between a business and its customers. In fact, offering a clear and consistent way for customers to return a purchased item can increase conversion and repeat rates.

Giving customers a full refund on their orders can result in a loss of profitability, and knowing that someone disliked your product can be disheartening for business owners who strongly believe in the benefits of their products and services. 

For these reasons, it can be tempting to avoid creating a comprehensive return and refund policy and leave the mounting problem unaddressed. As you’ll see, however, this would be a mistake.

The pitfalls of a poor return policy

Over time, customer complaints about your return policy can start to filter onto social media, showing up as reviews or comments under your ads or even in Google searches about your business. This is where a poorly implemented return policy starts to negatively affect your overall reputation as a business.

If negative sentiment about your return and refund policies starts to spread online, you’re likely to see a drop in both conversions of potential customers and overall customer satisfaction.

Processing every return manually and dealing with customers on a case-by-case basis can also be expensive for your business operations and exhausting for customer service staff. If the time and expense to process a return isn’t monitored and optimized, it can even prevent you from scaling your business.

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