Peter takes a keystone markup on dog boots in his store. At $11.95 they are a hard sell and when the dog won’t keep them on their feet unhappy customers bring them back. He tosses a coin to decide if he should stop selling boots or stop accepting boot returns, even though either choice kills sales. He considers a new return policy, and stops taking returns:

“No Refunds”

Scott starts out the same as Peter, but upon seeing the rate of returns he drops the price, gives the boots better shelf space and a nice sign:

“Your pooch approves or your money back.”

At the annual trade show, Scott thanks the boot manufacturer for putting his product in sturdy packaging. He doesn’t tell the manufacturer he often sells the same pair more than once.

Scott's customers are happy with the easy return policy and Scott is more than happy. He knows his average sale is just over $24, and this is about $5 more than the industry average. He knows this customer is likely to spend more than he returns. Scott likes it when customers come back, even with a return, because it gives him another chance to make a sale. Graciously accepting returns is an inexpensive way to get customers into the store (twice) and it generates a lot of good will.

Retailing is easier and a lot more fun when you have the right data.

Does your return policy grow your sales?
And on a related note, do you think there are still only two rules in retail?