# What is Refund Policy?

What is Refund Policy? The terms and process for refunding a customer. A generous policy raises conversions by 18% on average.

## How it works in practice

A generous return policy is a marketing tool. Zappos built an empire on 365-day returns. A customer who had a positive return experience buys again 89% of the time.

## Related metrics

- Chargeback — generosity reduces chargebacks
- Customer LTV — easy returns lead to repeat purchases
- Reverse Logistics — the physical process
- Trust Signals — a clear policy builds trust

## Common misconception

'Generosity means a loss.' Customers who have a positive return experience spend 60% more annually than those who struggle to return items.

## How to fix it

Too many returns? (1) which products get returned? (2) reasons: 'not as expected' signals a content problem, 'defective' signals a packaging problem.

## Real-world example

A clothing store: 24% return rate, 70% due to 'didn't fit.' A size guide plus live chat cut it to 14%, saving $9,000/month.

## Where to start

Post a clear policy on every product page and in the footer. 30 days is recommended.

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Category: Payments · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/refund-policy