How the speed of refunds influences the customer experience, affecting costs and sales.
The expectations that today’s online shopper has seem more diverse and challenging than ever. With demand for speed and convenience ever increasing, and the landscape of digitized payments and new technologies expanding, it’s very difficult for merchants to keep up. Needless to say, some areas of your online business might be overlooked when it comes to revenue opportunities. Especially the refund process.
While free returns are now commonplace, refunds have not kept pace. According to our most recent survey covering 10 major European markets, timely processing of refunds is a core factor affecting the customer’s checkout experience. Around 69% of shoppers report waiting four or more days to receive a refund and 36% wait over a week. Please allow me to explain why this slow refund process is hurting your business and how to turn it around.
The sales opportunity of faster refunds
Faster refunds can impact sales since shoppers generally wait till their money is back in their bank account before making the next purchase.
- 73 % wait for their money to be refunded before making a new purchase
- 52 % are willing to spend more if offered a faster refund,
- In the UK this spikes to 58%
This behaviour is even more prevalent amongst millennials and Gen-Z’ers. What’s more, faster refunds can also create more sales value amongst this demographic since 57% of them are willing to shop more frequently with a store that offers faster refunds.
Bear in mind, some markets may present better opportunities than others. Based on responses it’s clear that shoppers in countries like the Netherlands (67%), Norway (64%) and the UK (58%) would spend more at the same store that offered faster refunds. Only 51% of their German and 47% of Danish counterparts share that sentiment.
Saving costs through faster refunds
Apart from the revenue opportunities from increased sales, faster refunds can also have a positive effect on operational costs. Slow refund processes cause shoppers to spend a lot of time contacting customer support asking when they’ll be reimbursed. In the same report we also surveyed merchants, with 25% of them saying that refund handling is one of their stiffest challenges. An average 27% of all customer calls are refund-related with some regions such as in the Baltics and the Nordics seeing considerably high rates. For UK merchants it constitutes nearly every fifth support call (19%).
Across the board, consumers are becoming more and more intolerant of slow refunds. Over 87% of consumers said they would call the merchant to chase up a delayed refund, while 25% said they would call within the first three days to find out where their refund is. It’s clear that slow, manual refund processes are a drain on merchants’ resources and actively harms brand image. Automated, instant refunds present a real opportunity to reduce customer support costs. By shortening the time it takes for a refund to clear into a shopper’s account, they are far less likely to contact support.
73 % wait for their money to be refunded before making a new purchase.
Automate your refund process
The thing about refunds through card payments is that it involves a chain of several different parties. Each one requires the money to move back and forth between shopper and merchant resulting in the former waiting up to 16 days to receive their refund. So, how can merchants inject speed into this process?
Online Banking Payments offers a range of benefits to both consumers and merchants, including super fast, hassle-free refunds. However, only a ‘full-service’ provider that can initiate a returned payment via an API can power instant refunds and create an excellent brand experience. Something that is vital in helping any online businesses survive an ultra-competitive environment.
Trustly’s refund solution is automated; reducing the administrative costs in processing returns via check or manual bank transfer. Through satisfying an in-demand customer need, we also help strengthen your brand while saving costs and increasing sales value.
58% of UK consumers would spend more if refunded faster.
For more on how Trustly can boost your refund process, visit trustly.com. Download our latest refund report here.
To find out more about Trustly and the services they provide to the retail industry, click here.
This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.