Refunding with store credit can be a game changer for your returns process if used right. But what is it? And why is it so effective?
Experts predict that global e-commerce sales will reach a growth of $6.51 trillion* in 2023! It’s now more than ever, very important to cash in on as much consumer demand as possible.
In this article, we explain to you what store credits are. And we give you 3 of the top benefits of how it can greatly improve your return process. This can be really beneficial to your store and to your customers' shopping experience.
What is store credit?
Store credit is an alternative compensation offered by retailers to customers who return products. Instead of cash refunds, the store offers store credit or a virtual voucher for purchases only within the store. This encourages customers to keep their money in the business, which makes them want to shop again and be loyal. This loyalty can ultimately result in more sales.
Incorporating store credit into the return policy can be a valuable addition to optimize e-commerce performance. In the following sections, we will explore the top three benefits of using store credit.
Top 3 reasons why store credits are beneficials for your eCommerce
There are plenty of benefits to refunding with store credit, making it a potential game changer for your returns.
- Store credit offers customers flexibility in making purchases without immediate payment, which enhances their shopping experience. They can choose another item they like or wait until they have the necessary funds.
- Choosing store credit over cash refunds increases the likelihood of customers returning to the store, creating a cycle of loyal customers. This loyalty boosts future sales opportunities, making it essential for a thriving business.
- Lastly, store credit reinforces customer loyalty as customers feel appreciated and connected to the brand. This positive experience fosters a loyal customer base that consistently chooses the store over competitors.
Below, we have developed further the benefits of adding store credit to your online store.
1. Your customer has more options when returning an item
Whenever a customer wants to return an item, there can be several reasons to that. And most customers like having as many solutions offered to them when they decide to send back their parcel.
Sometimes, customers prefer not to wait for their bank or credit card company to issue a refund. This can often take some time and not everyone wants to wait to be able to reuse that amount.
Additionally, often customers simply want to swap one product for another the same in a different size or style. Or, they may also find an alternative product they want on your website instead of the initial purchase.
Also, when returning an item, customers might need a little time to decide what they want to buy next.
So instantly issuing store credit is one easy way to give customers a fast refund option. And it gives them time and flexibility regarding how them want to spend the credited amount.
You can easily carry out exchanges of this nature using our Exchange It app on any Shopify stores. Our app features an amazing platform to manage returns processes and offer store credit.
2. Store credit improves customer retention, loyalty, and spend
By offering more flexibility for your customers, refunding with store credit can be a game changer for your eCommerce. It can improve the customer's experience and as a result increase significantly customer retention.
When customers have store credit at a specific store, they are more likely to return and use that credit.
Plus, the credit does not come from their bank account, but from the store. This can give customers the illusion that they are not spending any money.
As a consequence, shoppers may add more items to their basket if they see something they like while browsing. This often increases their total spending and of course the AOV and revenue of your store.
Furthermore, offering store credit shows a willingness to be flexible, a hallmark of great customer service. When customers receive store credit, they are more likely to feel a sense of appreciation and connection to your brand. Customers who have a positive experience tend to trust and remain loyal to your store. This is because they feel valued and confident that you will go above and beyond to ensure their satisfaction.
By offering store credit, you create loyal customers who will keep choosing your store instead of others. If your service is good, you will generate a loyal customer base, for sure!
You can therefore use credit options to your advantage. It will very likely increase the amount of returning customers coming back to your store. Shoppers will come back time and time again, as they know they can trust your refund policy to be reliable.
3. It reduces revenue loss from returned items
Return and refund processes can sometimes be time consuming for both party. If you haven't already, we suggest you follow our guide to implementing a robust returns or exchange policy. It will help you create a clear and foolproof policy.
As previously mentioned, using store credit, offers your business more flexibility when it comes to returns.
For example, what to do when a customer returns a product in poor condition? Well, there are typically two options: refusing the return or incurring financial losses.
With store credit, you can let the customer return the product and redeem the credit at an equivalent value. You will then be keeping their money within your business. This can allow for partial returns or refunds, offering much more flexibility within your returns process.
Store credit can also discourage customers to send products back. For example, if they bought the item at full price and you are now offering a discount on your site. They might want to return it, in that case, you can offer a credit store or the difference in price. By avoiding returns, you save money and increase customer satisfaction, encouraging them to come back to your store.
In conclusion, store credit offers numerous benefits for both customers and businesses. It incentivizes customers to return, allows for flexible purchasing options, and reinforces customer loyalty. By adding store credit into your return policy, you create a positive shopping experience that keeps customers coming back for more.
Now is as good a time as any to implement better, more flexible refund options for your customers. So, why not give Exchange It a try to start implementing the use of store credit?
Our explainer video for refunds and charges will take you through the basics and the video below will show you how to set up store credits on Shopify.