Having a straightforward return policy will help boost sales

A return policy is a crucial component of any sales and marketing strategy. However, so many businesses forget how important it is to their ability to sell products and services.

Recently, I was shopping for a new video security camera that would allow me to monitor my home and dog, no matter where I was in the world. My dog, Sophie, likes to sleep on the sofa when I am not around, and I wanted a camera that would enable me to catch her in the act and reprimand her.

The model I chose was offered by a number of retailers, but I decided to go with one over the others because of their return policy. The vendor I chose offered an easy, no-hassle policy that appealed to me.

Many people feel that a return policy allows customers to take advantage of the business, but I look at it a very different way. A return policy is a positive and proactive way to stimulate and increase sales -- just consider the last time you were not 100 percent sure of a purchase, but you went ahead with it because you knew you could return it if the product did not work out.

Truth is, even if a few customers do take advantage of your return policy, the benefits of offering a return policy far outweigh any potential drawbacks. The key is finding the return policy that is right for your business.

Some stores offer unlimited return privileges. For instance, Costco and Hammacher and Schlemmer allow customers to return almost anything for the life of the product with no questions asked. Hammacher and Schlemmer is able to do this because they have priced their inventory high enough to make up for their liberal return policy. I believe Costco has just figured out it is a very good business policy.

While an unlimited return policy works for these two retailers, it is not feasible or economical for most businesses. Most offer some version of a 30-day unconditional returns policy.

Businesses should fully appreciate how their return policy impacts sales. By reducing the purchase risk to the customer, a return policy increases the chances of a sale. In addition, return policies should be simple and easy to comprehend without the help of 12 lawyers to interpret the fine print, and since they are so important to the customer, it should be explained and promoted.

Bottom line is customers demand the ability to return a product that does not work as expected. Business that do not provide a return policy its customers feel is acceptable will just not see the sales growth more progressive businesses will.

Now go out and make sure you have a simple and straightforward return policy that resonates with your customers.

You can do this!

Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com.

Tags: Florida Small Business