Store credit advantages
Store credit policy brings a lot of benefits to the retailers including:
Improve customer retention and loyalty
With provided store credit for the next purchase, customers are encouraged to come back to your store to make another purchase. This will help retailers to boost customer retention and also increase customer experiences. Besides, store credit allows you a second chance to impress your consumers and incrementally create customer loyalty.
Encourage customers to spend more
Customers normally feel more comfortable with a reasonable store credit policy than not accepting returns. In reality, store credit cards or gift cards have been shown to encourage customers to visit the store more frequently. Furthermore, when shoppers are enticed by other things inside the store, they tend to spend more than their store credits. Retailers who take advantage of this opportunity will be able to increase sales.
Lose less revenue on returned goods
When customers want to return the products, it is quite a headache for the retailers to ensure both customer satisfaction and revenue. However, Store credit can allow you to avoid losing revenue due to returns by converting sales into exchanges, but still not destroying customer purchasing experience.
Store credit disadvantages
On the other hand, store credit does not always benefit retailers. It also has some drawbacks that retailers may not recognize. It can harm a retailer’s reputation. Since the store credit is just valid in the same store, customers may feel worse rather than better if they are “forced” to continue purchasing at a retailer. Therefore, store credit just works well for the retailers who have a wide range of products for choosing from.