After weeks, months or even years creating your perfect product, you were finally ready to sell. But it wasn’t easy. It took so much effort to get leads to notice your ads and get them to your page. It took even more effort to keep them there long enough that they clicked around. Only a handful of those left decided to hit “buy”(and even then 70% dropped off once inside the checkout). After what felt like the biggest weed-out of all time (take that college calculus), you FINALLY made some sales to the daring souls that converted to the end. Except now, your helpdesk is filled with refund requests, and you can feel yourself deflating like a balloon on a hot summer day.
If you’ve ever sold anything, in person or on the internet, you know how frustrating refund requests can be. And unfortunately, they are a part of running a business. But that doesn’t mean you should throw in the towel.
In fact, there are some amazing ways to reduce your rate of refund requests (which in turn will boost your customer satisfaction). Continue reading to see exactly what they are and implement them in your business.
Tackle buyer remorse at the source
The credit card confirmation message can feel like a bucket of cold water. The fiery excitement of getting access to an amazing product can be rapidly doused by the customer realizing that they’re going to see a hefty charge on their next statement.
If you ever wonder why some customers request a refund, just minutes after making a purchase, this is usually why.
The key to helping your customers overcome buyer’s remorse is distraction. Use your sales copywriting skill on your “thank you” page to remind your customer of the awesomeness they now have access to.
Then, give them a checklist of things to do to get started using your product right away. If your customer uses your product, even briefly, you can keep the fires burning, and the odds of them asking for a refund dip dramatically.
Use stick sequences to increase product adoption
This follows up nicely from the last strategy. Once your “thank you” page and “welcome” email are geared up to increase product adoption, and thereby reduce refunds, you should reinforce this with a series of emails (and preferably videos) that are all about strengthening the connection with your customers.
Known as a “stick sequence” (they help the customer to stick to your business – duh), they need two critical components if they’re going to have an effect. They should be INTERESTING and USEFUL.
If the stick sequence isn’t interesting, your customers will stop opening the emails when they arrive. And if they’re not perceived to be useful, your customers will soon be distracted by something more important.
There’s no way to oversell this – a strong stick sequence can make or break a business. So, don’t scrimp on resources. Hire a good writer, create smart videos and give your customers your best knowledge and strategies. Throw in some free gifts. Relate some interesting and entertaining stories about your experiences in business.
Think of it like that time you got a date with that girl/boy in high school who you’d been pining after for three years. This is not the time to play it cool, play it safe or pretend to be indifferent. Give it your all. Flowers, chocolates, their name carved into your forearm… whatever it takes.
We didn’t get a lot of dates in high school. Hard to say why.
Ask departing customers “why”
It’s definitely not cool to put up artificial barriers to try and keep unhappy customers from leaving. So, it’s understandable if you’ve gone the whole way and promised that refund requests will be honored, “no questions asked.”
However, no matter how much you feel obliged to make existing customers feel comfortable – with the hope that they might return someday (or, at the very least, not bad-mouth you on Facebook) – there’s no reason or harm to be had from asking the question AFTER the refund has been processed.
It’s unreasonable to expect to reach a point where you never receive a refund request, but you can certainly reduce your current percentage by gathering intel on the reasons for people exiting.
You don’t need to make a big song and dance about it (unless you’re selling lessons on how to write a musical – hah!). Simply drop departed customers an email asking if there was anything you could have done to improve their experience. Don’t try to debate or get into an argument – simply listen to the comments you receive with an open mind and use this information to improve your offering.
And be sure to send a special note of thanks to every customer who takes the time to respond.
Don’t get sucked into a price war
How deep are your pockets? Because in a price war the winner is simply the person who runs out of money last.
And these days you’re not taking on the business next door, you’re taking on Amazon, Google, Netflix and Facebook. Now those are some deep pockets.
Unless you’re planning to follow the same business model – which, in short, involves landing scores of investors and operating with almost-zero profit margins until everyone else has gone broke – you need to forget about competing in price.
Start by knowing, with a high degree of precision, what your profit margins are. You need to take a long-term view and know, on average, what each customer is worth to your business. Once you have that information, be disciplined in setting prices that ensure every sale results in a profit and not a loss.
If you then find yourself up against a competitor who offers a similar product but at a price you can’t match, try going the other way and upping your prices significantly. Adjust your service and present it as a premium option. You might win fewer customers this way, but if priced correctly your profits should be higher.
You’ll also likely find that the more customers pay for your service, the more reasonable and friendly they’ll turn out to be.
Are we suggesting that cheapskates who are always trying to get something for nothing don’t make good customers? Well, that depends. If you’re a cheapskate, then no, we’re just pointing out some measurable facts. But if you’re not a cheapskate then, basically, yeah… those people suck.
Next time you get a refund request (we’re helpful, not magical), pause before you let the wind out of your sails. While it may be money lost, it’s a good learning opportunity and a chance to create a positive experience for a less-than-satisfied customer.
And then, take what you’ve learned, go back and tweak your product, create email sequences that address customer concerns and write copy that reassures. Before you know it, your refund rate will be going down while your profit margins skyrocket.