What is store credit?
Store credits refer to the amounts that retail owners usually provide their customers after making purchases or returning items.
Types of store credits
- Store credit cards and financing:
If using this type of store credit, customers are able to complete their purchases at a later date or incrementally.
- Returns and exchanges
Retailers usually offer customers this store credit when the customers want to return or exchange products that they have purchased before. In other words, this type of store credit is used as an alternative to a full refund.
This card is similar to a gift certificate/ voucher which contains a certain amount of prepaid money that is available for use in a variety of purchases.
- Loyalty reward.
Customers will be offered product discounts, coupons or points for their frequent purchases in particular stores from the same merchant.
Advantages of store credits to retailers
Store credit strategies are usually adopted by retailers as an effective tool that can encourage customers to make more purchases and strengthen customer relationships. Since, they allow more flexible returns, which will improve the customer shopping experience.
Besides, store credits also support retailers to avoid the risk of losing revenue to returns but still be able to provide customers with a positive experience.
Differences between store credit and reward points
The reward point strategy also appears as a cost-effective way to maintain customer relationships.
In general, there is a shared characteristic between store credits and reward points which is they can be used as a payment method.
However, store credit is issued only when clients return products. In place of getting a full cash refund, customers will receive store credits from the salesperson. In contrast, reward points are given when shoppers complete a desired action within the store.