Store credit refunds are a win-win situation for customers and brand owners. The customer doesn’t have to wait for money to hit their account, and the brand knows they’re not taking a loss on the original sale.
Giving customers instant access to funds has a psychological effect that leads to increased spending. It’s common to see customers spending more than the refund amount as soon as they get this “free” money.
Store credit refunds also allow you to create a more flexible policy especially when it comes to extending return windows. More brands are looking to improve the average ecommerce return rate and are experimenting with different methods of incentivizing customers to choose store credit, such as offering a slightly higher amount than the cash value. Despite the slightly bigger margin hit, this offers the brand a chance to create a positive touchpoint, ending on a high note to maintain customer retention. Average refund rate ecommerce is lower when store credit option is enabled.
“The bottom line is that store credit offers you flexibility and an added tool to help inspire customer spending and loyalty.” – Shopify