What Returns Am I Legally Obligated To Make?

Good news for those who thought the government was intruding into every aspect of business! You get to decide your own return policy as long as you tell your customers what it is before they buy and always take back defective merchandise.

Why Should I Have A Return Policy That Does More Than That?

There are two good reasons to have a return policy.

If you are going to have a merchant account, where you can take credit cards as payment, your merchant account provider will want a copy of your return policy. Theoretically, it will be applied when customers request chargebacks of their purchases from you. Practically speaking, many merchant card issuers will make chargebacks for a variety of reasons. Having a good return policy puts you more in control of the situation that can reduce your costs.
Did you know that, on average, it costs 8 times more to get a new customer than it does to keep a customer that has already ordered from you? Amazingly enough, customers who have had problems you have successfully resolved often become loyal customers. They will buy from you again and they will recommend you to their friends. Why? They know how you will treat them when there is a problem and it convinces them that you provide superior service.
What Do Your Competitors Do?

Your competitors' return policy is very useful information for your business. Look at what they do, and then adapt it to your customers and your business. Find out:

Do they take back all merchandise?

How much time do customers have to return products?

What kind of "red tape" is required? Do they require a receipt? Are any special forms required to make returns? Does the customer need to get a return authorization number?

Do they charge a restocking fee? If so, how much?

Do they pay for return shipping or does the customer have to pay for it?

How do they handle exchanges?

What is the process for returning unwanted gifts?
Writing Your Policy

Your return policy tells customers what is required to return products they have purchased from you. It's important to make return instructions easy to find, easy to read and easy to follow. Who in your organization, or which contract source, handles returns? Make sure that contact number such as fax and phone numbers, email and snail mail addresses and websites are clearly posted on your sales receipt and other materials.

You can expect customers to want to return defective merchandise, unwanted gifts and products that just do not meet their needs. In all cases, it may be easy to help them find a replacement or upgrade that will make them happy. Don't be pushy about it, but do make sure that they understand the opportunity

Once you've established normal costs of returns for your business you can look for ways to improve your results, both in customer satisfaction and in profitability.

Here's where you use your budget as a tool. If you find that an individual employee is signing off on greater adjustments than others, check it out. Usually, you'll find that the area in which the employee works has an underlying problem that needs to be fixed to reduce your costs. Occasionally, the employee doesn't understand the return policy and is being too generous. It is also possible for an employee to be using the return program for gain. If you discuss results with employees and they understand that you take an active interest in these expenses, you can help honest people stay honest and encourage bad ones to work somewhere else.

-Cindy Nemeth-Johannes