At least 5 out of 10 online businesses in Nigeria have a no returns policy or a no refunds policy splashed in capital letters on their Instagram business bio.
This extends to physical stores in Nigeria too, which is surprising as Nigeria’s Federal competition and consumer protection act of 2018 states that no refunds or return policies are illegal in Nigeria.
One of Nigeria’s leading transport companies – Peace Mass Transit paid a sum of NGN 500,000 to an aggrieved customer on court orders over a paltry sum of NGN 700.
Stating that your business operates a no refund/return policy is of more harm than good to it.
What is a refund/return policy and why is it important for your business to have one?
A refund/return policies are the rules or conditions a business creates to manage how customers return goods that they purchased. It tells customers what items can be returned, for what reasons, and the time over which returns/refunds are accepted.
Your refund/return policy must cover what is liable to be returned or refunded, the time frame and processes.
Dealing with a case of refunds/returns doesn’t have to be complicated or end up in court only if your business creates one that can protect itself and the customer.
Here are 5 reasons you should create a small business returns policy in Nigeria:
- It is illegal to operate a no refund/returns policy in Nigeria.
According to the laws of the Federal competition and consumer protection act of 2018, it is illegal for businesses existing in Nigeria to operate a no returns/refund policy.
If a customer wants a refund or return and a business refuses to issue one in line with the conditions of their return policy if any, you can end up in court for refusal to refund.
But the question to be asked and answered is: How can a business sift and discover what customers to grant a refund to if there’s no policy guiding refunds/returns?
Having a well-thought-out and a laid-down returns policy that all customers are aware of before making purchases is of great benefit to businesses.
2. It builds customer trust.
What I ordered VS. what I got is no new trend or joke to active participants in the online shopping market of businesses and customers in Nigeria. Online shopping is still approached with hesitancy and scepticism in the Nigerian business space.
A refund/returns policy gives customers a sense of security because it can assure them that if something has gone wrong with delivered products in line with specified conditions in a returns policy, they can always get a return or refund.
Also, if a customer has made a purchase, they aren’t too pleased with, with no sight of a return policy, their chances of being a return customer are next to none.
Drive higher retention rates and build trust by creating a refund/return policy.
3. It attracts new customers thereby increasing sales.
In a customer survey by Narvar in 2017, it was discovered that 49% of customers actively check a business’s return policy before buying anything. Deciding to ignore this 49% to focus on the 51% that don’t check for a policy will be shortchanging your business of a great number of potentials.
People view a return policy as a sign that the product will be good, or else they can get their money back as customers know that businesses never want to lose.
4. It helps manage customer expectations.
A refund policy helps manage customer expectations hence preventing future disagreements or clashes. If a customer is aware from the start of what policies around returns they can expect shopping with a particular business, the decision-making process will be easier for them.
It will also protect businesses from customers that may try to take advantage of the illegality of no returns/refunds to outsmart a business or receive returns or refunds for a product they already used.
5. It will help save you time.
Small business owners typically have to juggle being their own customer service associates to being the accountant, the marketing lead, and operations. Maximising time and productivity is key.
Having a returns policy will save you from back and forths with different customers every day on what your stance as a business on returns is.
Whether it’s time away from lawsuits or time saved on back and forth, having a policy will save you time.
Creating a returns policy can feel like a scary step for small businesses, but it is better to be safe than sorry.
These are some of the reasons a returns policy is important for businesses operating in Nigeria.