4 Tips to Lower Your Refund Rate
Refunds and chargebacks are inevitable in business, and it’s hard not to take the requests personally.
This is why it’s helpful to have someone else handle them!
Not only are the requests a little uncomfortable, but chargebacks are a surefire way to hurt your merchant account reputation.
There are a few things you can do to make sure your refund request rate is as low as possible and stop the chargebacks before they even happen.
In this episode, I dive into 4 tips I use in my own business to reduce and, in some instances, eliminate refunds and chargebacks.
Be sure to check out the Business Strategies section for more tips like this.
Hey, this is Julie here. Today I want to talk about how to lower your refund rate and virtually eliminate all chargebacks in your business. Sound good?
Refunds. There are just a natural part of a business, right? It’s pretty normal for at least 10 percent of people to say, Hey, I want a refund.
If you’re really good at what you do and you deliver a great customer experience and you’re really good at setting an expectation that can be met, your refund rate probably will be less, but how do you ensure that your refund rate is as low as possible and that you stopped getting or don’t get any chargebacks.
And we all know that chargebacks are terrible on your merchant account reputation.
So the first thing that I really encourage you to do is to make sure that all of your order forms are decked out with very, very clear expectations on what they are purchasing and what the refund policy is.
When someone asks for a refund and it’s outside the boundaries of what you identified, you need to have a strong backing.
So don’t just hide your refund policy so they can’t find them. Show them with checkboxes. Look, you agreed to this. Here’s the refund policy. It’ll make your argument so much stronger.
But secondly, when it comes time to refunds, you want to understand what’s really going on, what is actually happening.
And this may seem completely counterintuitive, but when someone asks for a refund, do you need to validate their reasons why?
And you think, well, but their reason is crazy and maybe it is. Maybe it’s completely unreasonable, but if you don’t validate it, they will never hear what you say next.
So the validation at the beginning is a way to get them to hear what you’re about to say.
So it could be something as simple as, I’m so sorry that you’re having a bad experience. I completely understand your frustration.
That may feel really uncomfortable to say another reason you probably should have an assistant do it instead of you because it’s hard.
You take it personally. When people want refunds. Validate them.
Then that hopefully will diffuse the situation enough that they can hear what you’re going to say next.
And what you’re gonna say next is you’re going to hold your boundaries while creating a good faith effort. And what I mean by that is show your willingness to move a little bit.
Maybe they’re failing on their payment plans because they don’t have money and they want a refund because finances are tough.
Say to them, “I completely understand your frustration. I don’t give out refunds on payment plans, but I know you’re in a tight spot. So here’s what I can do for you.”
Pause their payments for 60 or 90 days. Give them a breathing room. Tell them that you’re going to let them pick up where they left off, show them something, whether it’s a free gift, a free offer to try to get them to see, oh, well, maybe I should give this another shot.
Ultimately, you’re going to have pain in the butt customers, they’re going to be rude. They’re going to demand refunds even when it’s outside your refund policy.
That’s ultimately a really personal decision. I’ve chosen to give out those refunds when it’s really, really obvious that they are not a customer that is ever going to want to buy from me.
And the reason I do that is because chargebacks are going to kill your merchant account. I promise you it’s not worth it.
What I have done in my business to ensure this doesn’t happen too often is to tell them, listen, this is outside the refund policy, but I’m going to go ahead and give it to you, but I want you to know that this is on one condition.
And that one condition is that you are not allowed to buy anything from me again because you’re breaking a contract and I’m going to let you out of that contract because I’m the bigger person.
Don’t actually say that, but then explain to them that they can never buy from you again because that’s not fair. You need that person out of your life away.
Sometimes customers, if you have other products that they’re interested in, that’s enough for them to think, well, let me renegotiate and then go to the negotiating table. See what you can work out for them, try to show that you care about their success.
Those are my tips for reducing refund rates and getting no chargebacks.
And I know the best conversations happen after the camera stops rolling. So if you have any questions, comments, feedback, or criticism, put them in the comments below because I read everyone and for more videos like this, you can go to Juliechenell.com. I’ll see you next time.