Stores have been buzzing for weeks now, holiday music has been blaring on an endless loop, and being able to muster some holiday cheer is all that sales associates can manage.

And still, they know that in a few days’ time the crowds will be back—some happy with gift cards to spend, some looking to exchange gifts they don’t like for items they do, and some plain pissed off and looking to return.

Returns are a normal part of the retail cycle. On average, approximately a third of transactions are refunds, industry experts say. And how a business handles that transaction can make all the difference in terms of customer loyalty.

"Every business owner knows things will go wrong from time to time," writes Maribeth Kuzmeski, author of ...And the Clients Went Wild! How Savvy Professionals Win All the Business They Want. "It's how you handle these episodes that counts. And at the holidays, the stakes are higher. People have higher expectations and a lower tolerance for mistakes. Combine that with distracted employees and larger-than-usual crowds, and it's the perfect winter storm, so to speak.”

Micah Solomon, author of Exceptional Service, Exceptional Profit, agrees—to a point. “Most customers understand that things can and will go wrong. What they do not understand, accept, or find interesting are excuses. For example, they don’t care if their problem originated in a different department,” he says.

But before retailers even start processing the transaction, Solomon suggests they take a moment to consider the upside. “Obviously, we all assume a return is a bad thing for the bottom line. I think this is backward thinking. A return, at least made in-store, means the customer is in the store! You are a sorry retailer indeed if you don't want customers in your store,” he says. “What can be even better is that they're often entirely new customers who receive the item as a gift—but in the wrong size, color, etc.—and they're showing up at the slowest time of the year, January, when you really need traffic in your stores.”

Larger retailers are often better prepared to absorb returns, forging agreements with vendors, having off-price outlets in which to resell merchandise, and pricing that element into their cost structure. But for smaller companies, the process can present challenges. Unless a retailer works on a consignment basis with a vendor, those who aren’t big-box retailers usually have to buy product up front, and then have to deal with whatever excess merchandise is left over.

Regardless of its size, stores need to make the best of the incoming crowds and handle customers with care, respect, and genuine interest. After all, customer issues can teach sales associates and managers alike about what consumers want, what works, and what doesn’t. “This is a huge, huge opportunity. What retailers big or small want are employees with the best people skills, the best sales skills, the highest scores for empathy and optimism working the returns process,” Solomon advises.

The simple guidelines below from Kuzmeski strive to make the exchange easy and meaningful:

• Learn to recognize (and truly understand) your customers’ situations. For example, someone shopping with children will have very different needs from, say, an elderly couple shopping for gifts for their grandkids. Train your staff to recognize these key differences and adjust their responses accordingly.
• Make sure you always follow through. Don’t tell someone you will be with him in a moment if you know you will be helping a different customer for 10 minutes. He’ll just stand around impatiently for awhile, start to feel annoyed, and then leave—probably heading straight to a competitor’s store.
• Be very specific with customers. When handling a service issue, let the customer know what is going to happen and when it is going to happen. The more information a customer has, the less anxious she feels.
• Give frontline employees more power. It’s important to empower your employees to become connectors. Often, they might think offering a discount or a coupon is the right way to handle a situation, but they may be worried that you, their leader, won’t approve. Make sure employees know they can and should do exactly what it takes to keep the customer coming back—even if it costs the company or store a little in the short run.
• Remember, your clients can be your best (or your worst) marketing tools. The stronger your brand, the more credible and visible you are, and the easier it becomes for others to do business with you. Impactful contact with customers leads to confidence and trust. It differentiates you from competitors, makes your clients feel important, gives them something to talk about, and brings in the referrals you deserve. Whatever you do, don’t give your clients a horror story they can tweet, blog, or YouTube into national prominence.

And sometimes, giving in and giving incentives to return are the best course of action. “Keep in mind the lifetime value of a loyal customer. A loyal customer is likely worth a small fortune to your company when considered over a decade or two of regular purchases,” urges Solomon. “A loyal customer may be worth $10,000, $100,000, or more. It is well worth figuring out that number and keeping it in mind if you ever feel that temptation to quarrel with a customer over, say, an overnight shipping bill.”

The value of that relationship is even more important to a neighborhood store that relies on locals to come in during off-peak times. So don’t panic when confronted with an unhappy gift recipient, says Solomon. “Customers’ sense of trust and camaraderie increases after a problem is successfully resolved, compared to if you had never had the problem in the first place. This makes sense, since you now have a shared experience: You have solved something by working closely together.”

Remember too that customers are human. They want a little acknowledgment of their pain and suffering, but for the most part, they’re understanding. “Great customer service isn’t necessarily about getting it right every single time,” says Kuzmeski. “I think most people understand that occasionally even the best companies are going to fall short. But what your customers absolutely do have to see from you is that you are doing your level best to deliver on everything you’ve promised them.”