Store credit is cost-efficient for any retail business in dealing with returns, yet, also is a great marketing tool. Not only this policy helps to boost customer retention, but also it enhances brand loyalty. With that in mind, today's article will show you several helpful tips to maximize the potential of store credit.
What’s online store credit?
Store credit is a document that retail owners give customers to return an item for other stuff at the same value.
In recent years, retailers have come up with innovative ideas to offer store credits in a variety of forms. For this reason, store credit varies in different retail businesses.
Saying you apply a purchasing policy that your clients can get a refund on their credit cards with a receipt. In lieu of a full cash refund, you can issue store credits with the same value and buyers will spend it on the next items. If that product is worth more, your shoppers will charge only the difference.
How the store credits differ from reward points
Reward points seem like a fruitful way to maintain customer relationships and show gratitude to loyalties.
Customers earn reward points through completing desired actions, such as making a purchase, registering a new account, referring a family member or friend, writing a review, etc. Unlike promotion codes or coupons with expiration dates, reward points are always on customers’ accounts. On the other hand, shoppers can redeem points for discounts on the next purchases.
Store credits and reward points share a common 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.
Types of online store credit
Returns and exchanges
When shoppers would like to return items that do not meet their expectations, a sales associate can offer store credits. In other cases when clients want to exchange wrong or broken items, this buying policy can also be issued.
Sales staff should keep in mind that the value of store credits is exactly equal to the amount of money of the returned or exchanged items.
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Why should retailers make use of store credit?
Lose less revenue to returned merchandise
The core benefit of this buying policy is that retailers do not reduce revenue on returns. In place of a full cash refund, shop owners can offer clients an exchange for other items with an equal amount of money. Store credit not only ensures cash stays within the business but also boosts sales.
Furthermore, shoppers consider businesses as flexible in terms of return policies. For purchasers, they will get an additional option and a longer timeframe to return products.
Enhance customer retention and loyalty
Returned products mean both a loss in profitability and a decrease in customer satisfaction.
However, store credits are a clever solution that keeps customers going back.
Apart from giving customers an additional incentive to come back, store credit gives the shop a second chance to please their shoppers and incrementally build customer loyalty.
Encourage customers to spend more
According to a study by GE Capital, in-store customer visits grew by 29% when businesses run a branded credit card (a type of store credit).
In other words, store credit proved to urge shoppers to come to the shop more frequently. Furthermore, customers have a tendency to spend above and beyond their store credits when they are tempted to other items inside the shop. If retailers take advantage of this opportunity, they can drive more sales.
Tips to effectively optimize store credit in retail shops
Let customers share store credits
It is essential to build a preferred brand image in customers’ eyes with flexible policies.
Let’s allow your shoppers not only to use their balance to pay for other items but also to share store credits with their friends and family members.
If they come to brick-and-mortar stores with their partners, it should be effortless to process payments with shared store credits. On the other hand, if customers would like to transfer their store credits, retailers might require clients to specify the recipient’s email and the amount.
Use a transparent policy
According to research by Invesp, 67% of shoppers check the return page before making a purchase. That being so, a clear and customer-centric return policy is paramount to any retail business.
With that said, store credit is a plus on various means that customers can return unwanted items. However, shop owners need to clarify what products are labeled as “final-sale”, which items store credits can be spent to acquire when things can be returned (30, 60, or 90 days).
Gather reward points when using store credits
Given all of the above, this purchase policy brings a lot of advantages for retailers, especially drive more sales. Therefore, businesses should offer financial motives for buyers to use it.
In common practices, customers tend to prefer cash to store credits. Sales staff ought to provide incentives, such as adding 20 points for a return of store credits instead of cash and 10 points for spending it to make a payment.
The bottom line,
A study of the University of Texas presented that a lenient return policy resulted in higher sales, after examining 11,000 retailers across the US. Therefore, retail businesses can try to use the store credits that allow customers to be more flexible in return and exchange merchandise. Oppositely, this purchase policy benefits business owners to retain clients, drive sales, and create a positive brand attitude.
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