Convenient Return Policies Increase Sales Todd Follansbee , WebMarketingResources.net - Feb 7, 2012

Your return policy can significantly boost -- or retard -- sales on your site.

According to a survey by Harris Interactive, 88% of US adult online shoppers indicated that when shopping online or through a catalog, a convenient returns policy and process is "somewhat important," "important," or "very important" to purchase decisions.

Moreover, 92% are somewhat or very likely to shop again with an online or catalog retailer if the returns process is convenient. Conversely, 85% "are not very or not at all likely" to shop again with a direct retailer if the process is inconvenient. Online loyalty is hard to capture and easy to lose.

LL Bean is a good example of a company with an extremely liberal, easily explained return policy. For over 100 years, customers have been able to return any product for any reason at any time. I am confident in saying that this policy has had an important and positive impact on their success. (It's a big reason I shop there.)

When creating the return policy, always consider the lifetime value of a customer, not just the profit from one sale. Are you willing to lose a customer who cost $25 in marketing to capture in order to save a $10 dollar shipping fee dispute, when just one follow up order could immediately erase that loss?

Here are some recommend steps:

1. Returns page. Include a Returns Page on your site describing your return policy, including contact numbers, hours of operation, FAQs, and customer testimonials.
2. Visibility. Make your return policies obvious right from the start by providing links to the returns page above the fold on landing pages, the home page, and in the nav bar.
3. Simplicity. State the policy as simply and clearly as possible, being as liberal as possible around issues of timing, receipts, and return shipping costs. Avoid asterisks and "fine print."
4. Linking. Include visible links to the returns policy throughout the cart process.
5. Return labels. Reduce fraud, processing costs, and shipping costs by including pre-printed return labels that include invoice numbers.
6. Instructions. Provide simple, user tested return instructions in every package.
7. Easy pickups. Make return pickups as easy as possible by including instructions on how to reach carriers to schedule pickups.
8. Testing. Test the return policy by sending packages to friends, having them arrange returns and soliciting their feedback. Test your return procedures by asking these friends to make incomplete returns, or returns that violate your policies. Ask these people to call your contact numbers and report on how customer service handles the returns.
9. Immediacy. Make it clear when customers can expect responses to phone or e-mail inquiries -- and don't use ASAP statements.
10. Shipping Charges. Be clear about how you handle return shipping charges, for example, who pays if the product was ordered incorrectly versus who pays if the wrong product was shipped. Remember the lifetime value of the customer!
11. Analytics. Track new visitor traffic to the "returns page" and note the percentage of successful conversions of those who visit the returns page versus those who do not. Increase conversion percentages by tweaking page layout and possibly even making policy changes.
12. Incentives. When you accept a return, consider offering a discount on the next sale, since, according to the survey cited, 88% of shoppers are "somewhat likely, likely or very likely to take advantage of a discount on the next purchase."
13. Confirmation. Confirm receipt of customer returns immediately.
14. Personal contact. Consider reaching out to customers in follow up phone calls or e-mail to check how satisfied they are with the returns procedure and to offer incentives for them to shop again.
15. Competitors. Monitor competitor return policies.
16. Fraud protection. Protect your bottom line. Fraudulent returns are increasing and are impossible to avoid completely. However, sites like TheRetailEquation.com can keep you up to day on statistics and fraud reduction techniques.

Remember, persuasion design makes it clear that it can be risky to make changes based upon the input of just one customer profile -- in particular, yours! Always try to test return policy changes with several objective people. It's easier than you think to get basic feedback. Sophisticated testing, however, normally requires expert help.

You can reduce new visitor anxiety, increase sales, and retain new customers with simple-to-understand, liberal, and visible return policies.

Todd Follansbee is founder of WebMarketingResources.net. He is a usability and persuasion consultant who has been helping sites improve conversions for over 15 years. His methodology won a top ten award in Entrepreneur Magazine. He has contributed to several books and his columns have reached millions of readers. He has helped both small sites and Fortune 100 companies improve their results.