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January 14, 2013

Convenient return policies are key to developing customer loyalty, but many ecommerce retailers continue to make the process far too onerous. Too often, they bury their return policy deep in their website and load it with technical jargon. Many also fail to give shoppers a reasonable amount of time to return merchandise.

A clear and generous return policy assures shoppers that they can try products out and not end up stuck with something they dont want, says Harley Finkelstein, chief platform officer for Shopify, an online retail platform that hosts more than 40,000 ecommerce stores. Its as important as the price or the product. I dont think people realize that.

Here are four ways to make your return policy more consumer-friendly and build customer loyalty:

1. Make return policies easy to find.

Retailers often worry that if they make merchandise return policies too prominent on their websites, theyll encourage customers to send stuff back. But hiding return policies can frustrate customers, as well as create more work for a companys employees.

After Vancouver-based Coastal.com expanded its contact lens business to include prescription eyeglasses in 2009, chief executive Roger Hardy knew that assuring shoppers they could easily make returns was critical, given how sensitive people are about selecting the right frames. The company launched an online Return Center where customers can initiate their return, print their own mailing labels and track their status, rather than having to call in and speak to an employee.

If you cant afford such a system, Finkelstein says, simply add a link to your return policy at the top and bottom of every page on your website.

2. Give customers more time for returns.

Allowing extra time might seem like a sure way to encourage more returns. Thats exactly what worried John Lawson, founder of 3rd Power Outlet, an Atlanta-based urban clothing and accessories retailer, when he lengthened the companys return policy from 14 to 90 days two years ago. But surprisingly, he found that the number of returns decreased slightly, while the number of purchases went up.

I think it has a psychological effect, he says. The longer I give them to return an item, the fewer returns I get.

Extending the return period makes customers feel more comfortable about making their purchase in the first place, says Rob Siefker, head of the customer-loyalty team for Henderson, Nev.-based Zappos, one of the first online retailers to offer a 365-day return period.

Piggybacking on this trend, Coastal.com expanded its return policy in 2011 from 30 days to a year. The company believes the added time, coupled with the new return center, helped to boost sales, which exceeded a million pairs of glasses in 2012, up from 450,000 in 2010 before the changes to its return policy.

3. Use plain English.

While your return policy technically lays out the legal terms of exchange, you dont want it to be laden with legalese, Finkelstein says. When I click on your return policy, I dont want to see a three page document, he says.

While you can include an elaborate description of your return policy in your sites terms and conditions, give customers a concise step-by-step summary of how to handle a return. The summarys main points should include:

• How long returns will be accepted
• How refunds are handled in terms of product exchanges and credit card or cash refunds
• Who is responsible for paying the shipping costs

4. Ask customers for feedback.

Consider sending customers a thank-you note and a discount on a future purchase about a week after processing their return. And take that opportunity to ask them for comments about their experience, Finkelstein suggests. Would they come back again? Would they recommend your business to other shoppers? How do they feel about your return policy?

Zappos regularly updates the FAQ section of its website when it notices that customers are writing in with similar questions about purchases and returns. The company wants to be as transparent about the process as possible, Siefker says. You dont want to overpromise and under-deliver. You want to be right on point.

You also want to show customers youre hearing their concerns and responding. Lawson, for example, extended the return policy to 90 days after customers told the company that two weeks simply wasnt long enough to return gifts purchased before the holidays. They dont ask all these questions they used to ask about returns because the time frame is so long now, he says.