Long-time online entrepreneurs know that product returns are part of the business. And no matter how frustrating and hectic the process is, promises to satisfy customers must always be upheld.
But did you know that product returns don’t necessarily mean refunds? That is if you know how to issue a Shopify store credit to your customers.
You see, when issuing a store credit, you get the chance to retain your customers and convince them to give your products another try. Therefore, you can keep them within your sales funnel at no added cost on both sides. So it’s a win-win situation.
This sounds like a good plan, right? And here’s how you can do it.
What Is A Shopify Store Credit?
A Shopify store credit is a digital record that represents a monetary value a customer has against an online store. As such, if your business offers store credit, a customer must be able to spend the entire amount for future purchases from your store.
Although a Shopify store credit is usually used to compensate the customer for their product returns and refund requests, you can also issue store credit to gain the benefits which we’ll discuss in the next section.
Why Should You Issue Store Credit On Shopify?
Issuing store credit on your online store offers you and your customers a win-win situation. But aside from that, you also gain some more benefits if you do it correctly. Here are some of them:
- Enhances Customer Retention: issuing store credit encourages customers to return to your online store and make other purchases. It fosters customer loyalty as they are more likely to use up their store credit balances rather than letting it go to waste. This increases repeat business.
- Improves Customer Satisfaction: Providing store credit to resolve returns or exchanges can enhance customer satisfaction by providing flexibility and demonstrating your willingness to accommodate and serve your customers. This, in turn, could result in positive reviews and referrals.
- Reduces Return Expenses: Instead of going through all the hassle of issuing refunds, offering store credit mitigates the financial impact of returns on your bottom line. While refunds directly affect cash flow, store credit keeps the money within your business, which in turn retains your revenues.
- Drives Additional Sales: When a customer’s store credit balance is used for purchases, it creates a feeling that they didn’t spend money at all. They might be willing to spend additional cash on other products. Thus, a Shopify store credit somehow creates an upsell opportunity to generate more revenue.
How to Give Store Credit On Shopify?
Just like discount codes, Shopify store credit is managed through your online store’s admin using Shopify’s native store credit function or by using third-party apps.
For future purchases, your customers can present their codes or credentials to use their store credit balances.
Important to know:
It is worth noting that as of this writing, Shopify store credit is in early access as a developer preview. As such, it is only available to Shopify partners, and it has not yet been launched for use by live online stores.
(We will update this blog in the future when the Shopify store credit function is launched publicly).
“But if that’s the case, how can I issue store credit on my Shopify store?”
Well, two other methods can be used to issue store credit:
- By issuing gift cards instead
- By using third-party apps to issue store credits
Using Gift Cards As A Form Of Store Credit
While gift cards are not intended to issue a store credit, using them is a great substitute because they do not require you to spend money for an app and are extremely easy to create.
Similar to Shopify store credit, the amount they hold can be set to represent the amount of credit you want to give your customers.
Additionally, gift cards hold store credit balances. Thus, customers are not compelled to use up all their credit balances in one transaction.
Read more: Shopify Guide: A Complete Step-By-Step Shopify Tutorial in 2024
Here’s a step-by-step guide on how you can offer store credit using gift cards:
Step 1: Create a gift card from your Shopify admin
Select the Products tab from the menu on your Shopify admin page and click Gift cards. This will open the page where you can create a gift card.
Here, there are two options:
- Create a gift card
- Add a gift card
Since we aim to issue gift cards to offer store credit, choose Create gift card so you can send it directly to your intended customer.
The other option, Adding a gift card, should be chosen if you want to sell digital or physical gift cards from your online store.
Yup, you can sell gift cards on Shopify. To learn more about that, read this article: How To Use Shopify Gift Cards To Gain New Customers: Step-By-Step Guide
Step 2: Fill out the Gift Card details
Under the Gift card details, fill out the necessary details.
Shopify automatically provides a Gift card code. But if you have a system of coding gift cards, such as to identify those that were issued as a form of store credit from those that were issued as a form of reward to customers, we suggest following your system so you can easily track them during your accounting period.
On the other hand, you can simply stick to Shopify’s initially-provided code to keep things simple.
Moving on, fill in the initial value with the amount needed. In this area, putting the full amount of the customer’s refund request as the initial value is only ethical.
Lastly, you can put an expiration date on the gift card. But as we see it, the best option in terms of store credit is not to put an expiration date not to put unnecessary pressure on the customer to purchase immediately.
The reason for this is that if you issue a cash refund instead of a store credit, the customer can keep his money without the immediate need to spend it. Additionally, agreeing to receive a store credit is at the customer’s discretion. Thus, you should show your appreciation for that.
Step 3: Select the customer name and click Save
After filling in the gift card details, you select the customer to whom the store credit on Shopify is intended. Since you already have their details (since they have previously made a transaction), you can simply search for their name in the search bar and select.
In instances where customers choose to check out as guests (if your store has this option), you need to create a customer. So be sure to ask for their name when communicating with them.
After choosing the customer, click Save, and your gift card will be ready.
There you have it, you now have a gift card that you can send to your customer. You should include a clear and accessible Shopify contact us page on your site to ensure customers can easily reach out with questions or concerns.
Some reminders when creating a store credit on Shopify using gift cards
Reminder 1: Copy the gift card code for easy tracking
After clicking Save, make sure to note down the gift card code so you can send it to your customer. After leaving the gift card page, Shopify will automatically hide the first 12 digits of the code because gift cards are considered as currency and only the customers can see them. There is no other way to view them once you leave the gift card page.
Reminder 2: Easily track your gift card store credit balance
After creating your first gift card, the corresponding menu will look like this so you can track the store credit balance of the customers holding a gift card.
You can see that at the right-most column of the list under Current/Initial. The Current value shows the store credit balance of a gift card. On the other hand, the Initial value shows the amount that you indicated when you first created the card.
Thus, if you issued a store credit to your customer for $100 and they used it to purchase a product from your store that costs $40, the Current/Initial column will show $60/$100 as the 40 dollars was subtracted from the initial amount.
Using Third-Party Apps To Issue Store Credit
As mentioned, issuing gift cards instead of store credit is just a street-smart solution. But if you are looking for purpose-made features for store credits, discount codes, and customer loyalty, you should consider installing an app.
These apps are usually called “Loyalty” apps as they are used to retain customers within your brand.
With that, let’s take a look at our list of apps for issuing Shopify store credit and more customer loyalty programs in the next section.
Shopify Apps For Issuing Store Credit
The apps that will be mentioned in this list are not just simple store credit apps. Instead, they are loyalty apps that offer other features in addition to issuing store credit.
01. AfterShip Returns
Rating: 4.7 out of 5 (2200+ reviews)
Pricing: Free plan available. Starts at $23 per month
AfterShip Returns is a loyalty app that could help you save time by automating the return process for you and your customers. In turn, this seamless process enhances customer satisfaction.
Additionally, you can use this app to encourage customers to opt for exchanges rather than returns. That way, you can retain customers and you can recoup your losses from return shipping.
Furthermore, AfterShip Returns improves operating efficiency, by providing a portal that centralizes the reporting on all processes. It also allows users to create branded return pages and automated email updates.
More importantly, this app also allows store owners to issue store credit options in exchange for refund requests to minimize costs.
Key features:
- Self-service returns page and email notifications to reduce customer anxiety
- Implement return rules to inform customers regarding products that can and cannot be returned
- Flexible return and exchange policies, including store credit, to enhance customer loyalty
- Manual tasks involving the entire process of return and exchange can be automated
- Manage carriers for efficient response and timely arrival of packages
02. Rise.ai: Gift Cards & Loyalty
Rating: 4.8 out of 5 (1000+ reviews)
Pricing: Free trial available. Starts at $19.99 per month
Rise.ai is a popular Gift Card & Store Credit platform for Shopify merchants that provides solutions for the creation of gift cards, managing store credit, creating rewards, referral channels, refunds, and all sorts of loyalty programs.
These features combined make for a potent loyalty app that can improve customer retention despite returns.
Rise.ai allows merchants to issue store credits easily and it can be integrated with Shopify POS so that stores with physical shops can monitor everything in a central database.
Key features:
- Rich in loyalty features such as cash-back programs, digital wallets, memberships, rewards, VIP access, store credit, and more
- Capable of creating gift cards in bulk. This is very useful in promoting your brand to large companies or other events
- Automated gift card management
- Automated workflows that can be activated by set triggers and parameters
03. Loloyal: Loyalty and Referral
Rating: 4.9 out of 5 (900+ reviews)
Pricing: Free plan available. Starts at $29 per month
Loloyal is a well-liked loyalty app that could help you boost your sales and retention rate, as well as increase your customers’ lifetime value through a powerful loyalty and rewards system.
It features an easy-to-use dashboard that allows you to create points and rewards programs, attract referrals, create VIP ties, flash sales, discount codes, giveaways, and more programs that are designed to keep your customers within your brand.
Key features:
- Rich in loyalty features such as memberships, referrals, reward progress, VIP tiers, etc. you can also create custom offers such as coupons, discounts, giveaways, free shipping, perks, in-store rewards, and more.
- Encourage repeat purchases using reward points
- Build a sense of exclusivity using VIP tiers and customer memberships
- Encourage your customers to become your brand ambassadors using the referral program
- Supports integration with Shopify POS so everything can be managed in one place
04. Return Prime: Exchange & Refund
Rating: 5 out of 5 (500+ reviews)
Pricing: Free plan available. Starts at $9.99 per month
Among all the apps in this list, Return Prime is the only one with a perfect rating of 5 out of 5. That in itself speaks volumes about what this app is capable of.
But contrary to what you’d expect, the app is pretty simple. Return Prime features a single portal where you can manage everything return-and-exchange-related. Including store credit.
It allows store owners to send return labels, offer in-store returns, and issue store credits instead of cash refunds to minimize costs on the merchant’s side.
Return Prime is also pretty flexible as it can be integrated into your logistics and warehouse management system so you can keep track of inventory both in transit and in the warehouse.
Key features:
- Fully customizable return portal to give your customers a delightful and seamless experience
- It can be integrated with 30+ apps, and merchants can build their integration using Return Prime API.
- Automated return labels
- Choices of refund payment methods such as gift cards offer customers store credit and other options
- Allows in-store returns
05. Parcel Panel Returns & Exchange
Rating: 4.9 out of 5 (400+ reviews)
Pricing: Free
If you are looking for a customer loyalty solution that has more functions than Shopify’s native gift cards but you don’t want to pay a premium each month, this app is for you.
As of this writing, Parcel Panel Returns & Exchange is a free customer loyalty app courtesy of Channelwill developers. It enables merchants to simplify the returns process via a self-service return center and email notification with real-time status updates.
And just because it’s free doesn’t mean it’s as basic as possible. It has a lot of very useful features that merchants on a budget will truly appreciate.
Key features:
- Create eligibility rules on your return policy to minimize fraudulent customer returns
- Protect your cash flow and retain customers using store credit and gift cards instead of cash refund
- Integration with Sendcloud, Shippo, DHL, FedEx, and other logistics partners
Conclusion
As we learned throughout this article, Shopify store credit is a great way to turn a negative situation (customer refund requests) into a positive one (customer loyalty).
The only thing you should remember when promoting store credit is that your customer should still be free to refuse. Refrain from compelling them to receive store credit if they otherwise want a simple refund.
But in cases where they agree to a Shopify store credit, seize the opportunity to impress the customer and retain them within your sales funnel.
At the end of the day, retaining a customer is way cheaper than acquiring new ones. So make sure to sprinkle some great deals alongside the store credit to make the experience more rewarding to your customers.
Explore more, check out: How to Sell Services on Shopify: 5 Steps to Building a Store
