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How Poor Return Policy Is Hurting Your Small Business

Nobody likes to see customers return goods or ask for a refund for a service they’ve already rendered.

But it happens, and there are many reasons why customers may want to return a product or ask for refunds for services rendered.

Top of them includes a defective product or unsatisfactory service, late delivery, wrong order, quality expectations mismatch, etc.

Unfortunately, many small business owners in a bid to avoid loss due to a return choose to set a No-Refund or No-Return policy.

Or when they do, they set one that’s so strict the return experience is a nightmare for the customer.

At first glance, such strict return policies can seem effective in saving the business money, but if you take a broader view, you would see why it hurts your business more than it benefits it.

3 Ways Your Return Policy Is Hurting Your Small Business

1. Poor Sales

Many small business owners believe that setting a good return policy exposes them to people who want to take advantage of their business and also negatively impacts their books.

But they most times ignore the reason for a return policy in the first place.

A return policy is set to serve as a guarantee for customers who may be scared about making a purchase.

Customers want to feel secure about making a purchase and a good way to do that is via a return policy that guarantees that they would get value for their money and if they don’t their money would be returned or something else depending on their desires.

Instead, a poor or no return or refund policy means that the business losses out of more sales because customers don’t trust that they would get their money worth.

This is worse for online stores and eCommerce businesses that rely on blind trust from customers.

Lacking a good return policy might just be what’s turning customers away.


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2. Poor Customer Experience

You want your customers to talk to their friends and family about how great your products or services are, but they can’t because of the poor experience they had that one time when they had to return a product.

No matter how good your customer service has been up till now, their experience is bound to turn sour when you tell customers they would have to pay for return deliveries themselves or that you can’t refund them cash except they get something else from your store or simply that you don’t accept returns.

Do you think such a customer would send a referral to your business in the future?

A poor return policy results in poor customer experience, which causes your business more harm than you can quantify.

3. Poor Customer Retention

Many businesses win the battle by denying customers a refund or the opportunity to return products to save a few bucks.

But lose the war when the customers never buy from them again.

Let me put this in perspective, imagine losing a customer that has a lifetime value of N560,000 Naira for instance over a return of goods worth a few thousand Naira.

This loss could have been avoided by a good return policy, but unfortunately, a lot of businesses are not looking at the bigger picture.

Your poor return policy is affecting your business’s ability to retain customers and makes you spend a ton to get new customers instead of the little it takes to keep them.

Dear small business owner, it’s time to review your return policy. Draft a better one that becomes an advantage for your business and not a liability.