As an e-commerce store owner, you’ve likely heard of store credits–they’re a powerful tool to encourage repeat purchases and improve the customer experience. But what is store credit and how can it help you sell more? This is exactly what we’ll dive into today.
In this comprehensive guide, we’ll walk you through what store credit is, the benefits of incorporating it into your marketing strategy, and how you can use it to boost your sales.
Without further ado, let’s dive straight in!
What Is Store Credit?
Store credit is a virtual currency or balance given to customers, typically during the refund process. Customers can then use this credit for future purchases within the same store. It’s a powerful tool to keep customers coming back while keeping the money within the business.
How does store credit work?
When you issue store credit, you’re essentially providing your customers with a “digital balance” equivalent to a specific dollar amount. This balance can be used for future orders, encouraging them to shop in your store again.
There are several types of store credits, including:
- Refunds: Instead of issuing a refund, you can grant customers store credits instead, encouraging them to buy again and return from your store.
- Compensation for order issues: When customers experience issues with their order, such as delays or errors, you can issue store credit as a gesture of goodwill to resolve the concern and encourage them to shop again.
- Customer loyalty rewards: You can also grant store credits to reward loyal customers, giving them an extra incentive to keep returning.
- Gift cards: Store credit can also be used in the form of gift cards. These are great products to add to your offerings–they’re a popular gifting option during holidays and special occasions, helping introduce new customers to your store.
As you can see, there are a lot of ways you can use store credits to improve the customer experience. Later on in this guide, we’ll discuss key strategies to help you do just that.
What Are The Benefits Of Issuing Store Credit?
Offering store credits provides a wide range of benefits to business owners. Let’s walk through some of its key advantages below:
1. Reduces revenue loss on refunds
Absorbing the cost of refunds and returns can be challenging, especially for smaller retailers. According to industry insights, US consumers returned 16.5% of their purchases in 2022, costing businesses a whopping $816 billion in lost revenue. This highlights the significant impact of refunds on your bottom line.
Offering store credits can help reduce these losses by keeping the money within your business. It’s also a great way to improve the customer experience and keep shoppers coming back, which leads us to the next benefit…
2. Drive repeat purchases
To put it simply: customers who receive store credits are more likely to return to your store to use that credit. When this credit is granted for a refund or compensation, you also get a second chance to create a better shopping experience for your customers. Overall, this can help you improve customer satisfaction levels and foster long-term loyalty.
3. Provides flexibility in your marketing strategies
Store credits offer immense flexibility–they can be granted for refunds, rewards, and even gift cards! There are several ways you can incorporate this into your marketing strategy to boost your sales and engage your customers.
For example, you can grant store credits to reward loyal customers as they reach higher tiers in your loyalty program. Likewise, you can grant them to successful referrers who successfully bring in new buyers to your store. You can also sell themed gift cards (that grant store credits) as part of seasonal promotions or special events.
How To Offer Store Credit On WooCommerce
If you’re running a WooCommerce store, then it’s easy to set up store credits using Advanced Coupons (Free). With this free plugin, you can extend WooCommerce’s default coupon functionality and easily grant store credits to WooCommerce customers, allowing them to redeem credits during checkout.
Easy store credit management
With Advanced Coupons, you gain access to a Store Credits Dashboard that provides a clear overview of all issued, unclaimed, and used credits. The Customer tab lets you manage individual customer balances. You can even adjust store credit amounts directly, which comes in handy for store owners.
Manage refunds seamlessly
Using this plugin, you can also issue refunds as store credits. It’s a more flexible and convenient option, allowing you to keep revenue within your store and encourage customers to keep shopping with you.
How To Use Store Credit To Boost Sales
Now that we’ve answered the question, “what is store credit?” and learned about its advantages, you’re likely excited to incorporate it into your own marketing strategy! So, in this section, we’ll reveal actionable strategies you can use to leverage store credits to improve the shopping experience.
1. Improve your return policy using store credits
Offering a customer-friendly returns policy is a key factor in enhancing the customer shopping experience. According to an industry survey, 92% of customers would buy from a business again if the return process was easy. Issuing store credits is a simple yet powerful way to make your returns policy less daunting for your buyers.
💡 TIP: You can this more appealing by offering an extended return window for customers who choose store credits over cash refunds. For example, if your standard return policy allows for 30 days, consider extending it to 60 days for store credit returns.
2. Drive customer engagement with gift cards
Selling digital gift cards in your store provides a convenient way for customers to “share store credit” that can be redeemed for future purchases. They’re popular last-minute gifting options during holidays and special occasions. Additionally, they help new customers discover your brand.
Apart from selling themed gift cards, you can explore other promotional strategies to drive more engagement. For instance, you can run gift card giveaways. Encourage customers to like, share, or comment on your social media posts for a chance to win a gift card. This can help generate a buzz about your store and drive traffic to your website.
3. Reward customer loyalty
Consider implementing a store-credit-based loyalty program to reward customers and keep them coming back.
Fortunately, setting up a loyalty program is now a lot easier with today’s tools and plugins. WooCommerce store owners, for instance, can use the WooCommerce Loyalty Program plugin to set up a rewards and points system in their store.
This powerful plugin lets you reward customers with points they can redeem for store credits when they make a purchase, leave a review, register as customers and so much more. It also comes with a full admin dashboard, giving you full visibility and control over your loyalty program.
4. Use store credits for win-back campaigns
Customer churn is one of the biggest challenges business owners face. It’s when customers completely stop doing business with a company, which impacts your revenue negatively. This is where win-back campaigns can help, and store credits can be a powerful tool in your arsenal.
Start by identifying customers who haven’t made a purchase in several months. You can then send them a personalized win-back email with a store credit offer. Make your email more enticing by showcasing what’s new–you can add new arrivals, or suggest products that match their purchase history.
TIP: Adding urgency to your win-back campaign can make it more effective. Consider setting an expiry date for winback store credits. For example: “Use your $15 store credit within the next 10 days before it expires!”
Frequently Asked Questions
Is store credit real money?
Store credit is not “real money” –it’s a virtual currency that works just like cash. It holds a certain dollar value, which can be used for purchases. However, it can only be used within the specific store that issued the store credit.
Is store credit the same as a refund?
Store credit is NOT the same as a refund. It’s a type of refund, where business owners grant store credits that can be used for future purchases within the store, as opposed to returning the money to the original payment method used. This is beneficial for store owners, as it keeps the money within the business and encourages customers to return for future purchases.
How does a store credit work?
Store credits are issued to a customer’s account, typically during the refund process. Once granted, customers can use these credits to pay for products or services within the store.
Conclusion
We’ve answered the question “what is store credit?” in this guide and walked you through its key advantages. As we’ve discovered, it’s one of the most powerful tools you can use to improve the overall shopping experience, offering the following benefits:
- Reduced revenue loss on returns
- Drives repeat purchases
- Provides flexibility in your marketing campaigns
We also unveiled some key strategies you can incorporate to leverage store credits, including:
- Improving your return policy
- Driving customer engagement using gift cards
- Rewarding customer loyalty
- Using store credits for winback campaigns
Plugins like Advanced Coupons make it easy for you to grant store credits in your WooCommerce store. With this plugin, you can grant store credits, manage them using an intuitive dashboard, and offer them for refunds.
We hope this article helped you out! Do you have any questions? Let us know in the comments section below!
