Consumers treat refunds as money they’ve already spent, making it easier for them to spend refunded money on another purchase.
https://lnkd.in/geEVqbA6
📢 Exciting Insights for Retailers! Learn How to Leverage the “Refund Effect” to Boost Revenue. 💰
Did you know that product returns cost U.S. retailers an estimated $816 billion in 2022? But there’s a game-changing strategy you can implement to turn this challenge into an opportunity.
Recent research from Harvard Business Review unveils the “Refund Effect.” Here’s a quick summary:
1️⃣ What is the Refund Effect? Consumers treat refunds as money they’ve already spent, making it easier for them to spend refunded money on another purchase.
2️⃣ How Does It Work? The key is to cross-sell products during the product-return process, creating an “earmark” that reminds consumers the money is lost.
3️⃣ Timing Matters: The Refund Effect works best when consumers haven’t received their refund yet. Cross-selling opportunities should occur before money is refunded to the original payment method.
4️⃣ Expectations Count: Consumers need to expect to keep the goods they buy for the Refund Effect to work. “Try before you buy” strategies may not trigger it.
5️⃣ Category Matters: The Refund Effect applies across product categories, offering diverse opportunities for retailers.
6️⃣ Benefits for Retailers: Implementing this strategy can reduce revenue loss from returns without alienating customers.
7️⃣ Success Stories: Companies like Amazon and Todd Snyder are already using these tactics effectively.
Don’t miss out on this innovative approach to tackle product returns and enhance your bottom line. Embrace the Refund Effect to benefit both your customers and your business. 🛍💼 #RetailStrategy#RefundEffect#BusinessInsights
Read the full article here: https://lnkd.in/geJMSWrS
How Retailers Can Capitalize on the “Refund Effect”
https://hbr.org/2023/06/how-retailers-can-capitalize-on-the-refund-effect