How do generous returns policies lead to fewer returns?

Posted on 26/11/2013 by Karen

Earlier this year, I was shoe shopping in earnest. Now, I happen to hate shopping. I think it’s a big waste of time. So you can imagine how excited I was to find 4 pairs of shoes that I wanted to buy, all in the one shop. 3 of them were perfect but I wasn’t sure about how comfortable the sexy suede pumps would be, so I asked the store about their returns policy.

I was surprised to find that I could return the shoes within 7 days as long as there was no wear on the soles. Which meant I could wear them inside at home, on the carpet, for a few hours each day to figure out if they would be comfy or not. Sadly, they weren’t, so I returned them, no problem.

A couple months’ later, I was shopping for sneakers. Same thing. Great shoes but I wasn’t sure, so I asked about this store’s returns policy. Well, theirs was not 7 but 28 days! And you could return them whether they were worn or not! “WOW! That’s fantastic,” I thought. I’ve got AGES to work out whether they’re the right ones for me.

But guess what?

28 days is quite a while, and by the time I had ummed and ahhed, the 4 weeks was up and I’d missed out. So, contrary to what you might think, this store actually benefited by offering a much longer period of time for returns. Clever. Which reminded me of a story I was told years ago…

The lifetime guarantee

There was a muffler company who offered a lifetime guarantee. It was a premium product and significantly more expensive than their competitors, but sales were strong partly because of this guarantee. If I remember the story correctly, this company only had 1 muffler returned in 15 years. Yes, no doubt because the mufflers were good, but also because of the other warranty conditions…

1) The warranty was not transferrable, so if you sold your car, the new owner couldn’t claim, and
2) You had to keep all the original paperwork to claim, and that’s another problem in itself. Or it is in my house. Because my kitchen junk drawer can only hold so much.