5 steps to speedy refunds

Our Pulse customer sentiment tracker shows that the single biggest cause for negative consumer opinions about returns is delayed refunds – customers hate the time between sending/dropping off a return and actually receiving a refund. The biggest sources of customer support engagements are missing or expected refunds which haven’t arrived. That shows just how frustrating an issue this is for shoppers.

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It makes sense, really: you’ve bought an item, waited for it to arrive, then when you receive it, it lets you down in some way. It could be a shirt that doesn’t fit or a gadget that doesn’t work, it doesn’t matter. What matters is that your time has been wasted and you don’t want the product any more – so of course you want some resolution (primarily, you want your money back, but you might also be happy to exchange it for a better fit or working model.)

So you repackage it and print a label and post it back to the retailer, which also is an inconvenience and more time and sometimes money spent. At this point, disappointment and annoyance have replaced any feel-good buzz you got from shopping in the first place. That makes waiting weeks for a refund feel like salt in the wound. My point is that a refund which takes forever is an ugly cherry on an unpleasant cake. It shows a lack of trust on the part of the retailer, and it extends the period of irritation for the customer while they’re out of pocket.

How can retailers prevent this buildup of negative experiences and make refunds painless and quicker for their customers? Doing so means preserving much more customer loyalty and stopping a negative slide of their brand perception, and massively lightening the load on their customer service team. We’ve got 5 steps for retailers to hit these important goals.

  • Communication, communication, communication
  • Know where your stock is – whether in stores or coming back in returns
  • The power of exchanges
  • Drop off options
  • Instant refunds

Know your stock

If the business can’t accurately track returns coming back, there’s no way to know when the customer can be refunded. A digital returns platform allows customers to book their return, choose a returns reason, and select how they’d like to make the return. They can also choose between an exchange or a refund, and specify the exact method of refund (e.g. store credit/card refund). When they’ve made their selection, they can drop their parcel at their chosen location or post it back. Doing this through the returns platform means the retail has full visibility and a good estimate for when the return will arrive at the sorting center.

That means they can provide customers with an estimated refund date, customized to their personal journey. Having a data point to work from reduces the likelihood of customers contacting support to find out when they should get their refund. The foresight that a digital returns platform provides also means that retailers can line up the right amount of resource for the volume of returns they will be receiving.

Communications

Automated communications can let customers know that their return has been acknowledged and that the retailer is awaiting the product in their warehouse. This information can be as granular as you need – up to including reverse tracking information, showing the item making its journey to the warehouse for processing.

This gives customers an honest insight into the process and gives them confidence and information, reducing the likelihood of reaching out to customer support to chase a refund. The proactive approach is more customer-friendly than reacting to a customer outreach, and it can be largely automated. However, to do this, the retailer needs to have good visibility of their own reverse supply chain, as we described above.

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Beyond the refund period, using post-sales communications to check on the order can prompt customers to take action more quickly. We’re all human and that sometimes means leaving things to the last minute, including returning products. Speeding up this phase with an email nudge or app notification can improve the speed of returns, which in turn minimizes the time a customer spends with an unwanted product and a hole in their wallet.

The power of exchanges

The best and fastest refund is no refund. An exchange saves cost for the retailer and time for the customer, and given that the majority of online returns are due to issues with size, fit or colour, customers are often willing to accept an exchange to a different size, for example.

The challenge for retailers is following up on the sale to find out whether the customer is in the frame for an exchange before they receive a return back out of the blue.

Once again, a communications platform that reaches out proactively to customers to check that they’re happy with their order can help. By including exchange offering as part of the customer journey, the business can preserve more customers and prevent issuing avoidable refunds.

Drop-off options

Having local and convenient drop-off locations for returns, whether your own stores or pickup/dropoff (PUDO) locations, allows retailers to offer an easy and painless way to return products. Even better, in-store returns of online purchases give customers the chance to pick up additional purchases.

From a logistical perspective, grouping returns in stores means that some can be processed within the store and put back on shelves locally, but it also means that those which need to be processed centrally can be consolidated, saving on reverse logistics costs.

From a refunds perspective, having a drop-off point means that you can validate that the customer has done their part by giving back the product and begin the refund process ahead of time.

Instant Refunds

Amazon actually initiates refunds immediately after the customer hands over a parcel at a Hub Counter location saving the customer waiting until the package makes its way back to the processing center. There are strategic options here, for example immediately issuing refunds to high-value customers, offering free returns to customers who don’t habitually return, and perhaps charging a fee to serial returners. Personalizing the returns experience can work in myriad ways but these basic opportunities are currently under-utilized by retailers.


To speed up the overall returns process, including getting customer refunds reconciled faster, retailers need to adopt digitized returns processes, like using a portal on their site to allow customers to book returns, and connect this online platform to stores using handheld devices so that they can properly track customers and returns, however they choose to return. Once they have the visibility and data, they can overlay the communications capabilities we’ve mentioned to nudge customer behavior and maximise long-term loyalty – and, of course, help reduce burden on the customer support team. Faster refunds is just the start of a much bigger journey for most retailers.