MBA1181 Creating a Refund Policy That Works

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Hey. Oh. Welcome to the Hundred Dollar the Warmba show business building goodness every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba a complete business training and community online. And in today's episode you will learn how to create a refund policy that works. Whatever your product is, you need to make sure there is an element of risk reversal. And that's where a refund policy comes in. Modern day customers, they want a way to say hey, if it's not a good fit, I can always reverse this decision. Your job as an entrepreneur, your job as the business builder is to create a good refund policy for your customers. Let me say that again. A good refund policy for your customers. The policy is for them and not for you. I'm going to go over the three key elements to any great refund policy and how to enforce it, how to make sure that the refund policy is followed properly in your business. Your refund policy is your friend. It's the way people can trust you and give you a chance, give you a shot. So today we're going to learn how to make it work for you and not against you. So let's get into it let's get down to business. Many people feel that a refund policy is a policy that's put in place to protect the business, to protect people from abusing your generosity. Right? That's the wrong mentality to have when it comes to your refund policy. What you want to have is the mentality of, hey, this policy serves our customers. It makes sure that we're being fair and honest and transparent at the same time. It allows you to set some ground rules so you can plan accordingly, so you can plan and project your profits accordingly. Most business owners get upset about refunds because it messes up their profit expectations. They think they're making X amount of money this month, but hey, a whole bunch of refunds came in and it screws it up. But this is just the price of doing business. You have to have this in place. So how do you create a policy that works for your customers as well, works for you as a business? So there's three key elements. The first element I want to touch on is that your policy has to be fair. Now, remember, when I say refund policy, this just means a period of time where people can try your actual product without the risk of losing their money. Maybe they're paying up front and then they can refund later. Or you might have a free trial where they don't pay anything at the start and they pay after a certain amount of time. It's the same kind of concept, but no matter what it is, you got to make sure it's fair. And the best way to make sure it's fair is to give them enough time to see if the product is right for them. So let's say, for example, you have a software product. You want to make sure that they have enough time to play with it, to try it out, to put it through the paces. If you have a physical product, you want to make sure they have enough time to receive it. Obviously, after you, you know, they pay for it, the shipping comes through to use it for a period of time and enough time to return it. I know this one sounds obvious, but it isn't to a lot of companies. You want to make sure that whatever your risk reversal, refund or trial, that it's enough time that it's fair. All right, number two, and this one's really important. You want to make sure your refund policy is communicated clearly and frequently. So at your checkout, make sure it's clear how much time they have before they cannot refund this product on your website. You can even put it in the confirmation email so they know there's nothing worse than going to a website where you're buying a product and you have to search and go through the scavenger hunt to find out what the refund policy is so you can feel confident to buy the product. Make sure it's in their face at checkout so they know exactly what they're dealing with. Communicating clearly is really important. Being transparent, getting in front of it is really what's important here. So you say, hey, we believe in our products, we believe in our policies. This is what it is. If people know what it is, you're already going to win with your customers because they say, hey, this person is being honest with me and upfront and I know who I'm dealing with, I know what I'm dealing with, I know how much time I have here. Now this is particularly important if you have a reoccurring charge, especially over a long period of time. Now, when it comes to a monthly charge, it's not really necessary for you to constantly say, hey, we're about to charge you because it's monthly. But if it's an annual, like we have annual plans with our software company, Webinar Ninja, we send them a heads up up a week before it's due. So a week before they get renewed automatically we say, hey, your subscription will be renewing in seven days. Just letting you know there's nothing for you to do. We're going to do this automatically, but this is just a courtesy email. Again, this screams transparency, honesty and hey, we believe in our products. And if for any reason you're not happy, you have a chance to cancel and not be charged before the subscription renews. And this is very easily done. You can do this through email automation where you schedule an email that goes out 358 days after they sign up. That's one week before a full year. The third ingredient or principle you really need to have with your refund policy is to make it easy and simple to get the refund. I've dealt with companies where I have been their customer for years. I pay them thousands upon thousands of dollars. And then I, I decided to make a change. I'm not going to be using them anymore, I'm going to use something else or not use this type of product anymore in my business. And I've canceled my subscription and I want to cancel it, let alone a refund. I'm not even asking for a refund, but I have to go through hoops and talk to three different people and get on a Phone call to cancel my account. What is this? This leaves a really bad taste in my mouth and it doesn't allow me to recommend this company that I happily use for a very long time to somebody else. So you want to make it simple for them to cancel or request a refund if they're within the refund policy. And this could be a simple instruction on your website where you they can send an email or fill out a form for a request and they simply just contact support and say, hey, I'd like a refund for my product. What do I do? They give them simple instructions. It's that easy. You want an example of how a good refund procedure looks like? Go to Amazon.com the instructions are super simple. And the same should go with your product. No matter what it is. If they can self serve themselves, it's gonna save you time and money. And it's also gonna make them feel empowered. Like, hey, I don't have to jump through hoops. I don't have to, you know, call the president for approval and all this stuff. It's crazy. If they could do it in a few clicks in their account, that's even better. Trust me, this is gonna help you in the long run. It's gonna give your company a great reputation. People are gonna share their thoughts even if they refund, hey, I wanted to buy this product, but I refunded it because it was the wrong size or maybe it's just not a good fit or it just wasn't ready. But I loved their customer service and refunding it was super easy. Recently, Nicole and I went to Fiji and we booked a few day excursions. We booked these excursions, you know, weeks before our trip. One of the excursions, we decided, hey, we don't want to do anymore because we just wanted to chill and relax. And it was a bit of a hike to go on the excursion. You know, you would have to drive about three hours to get on the excursion and we just wanted to relax. But this excursion company was a little expensive. But what I loved about them was that you can just simply call them within 24 hours of your excursion and cancel and you get a full refund. You actually would get 50% back if you called within 12 hours. So. But I called well before 24 hours. They say, yep, we got your cancellation, no problem. They sent an email to confirm and they refunded my money. And it was painless. And I thought, wow, I'm going to book with this company again because I feel like they are trusting trustworthy and they're of their word. And if I ever change my mind, it's not a big ordeal. I love the way I was treated and therefore I'm going to be telling other people about this excursion company in Fiji. So number one, make sure your refund policy is fair and serves your customer. Number two, you clearly communicate your refund policy, your risk reversal, your trial on your website, in checkout pages, in confirmations before renewals. And number three, you make sure it's easy for them to go through the refund now. We're not done yet. Now that you know what to do and how to create a good refund policy, your job is to make sure this policy is clearly understood and enacted upon, is done properly with your customer service team. If you're the one answering tickets, no worries. But if you're somebody else that's answering customer service emails, they need to understand this fully. You might be saying, hey, I got a great policy, I'm good to go. But if your team doesn't know about it, if your team doesn't understand it and understand the purpose of this policies to serve your customers, then your efforts are just not going to pay off. So make sure you train your team and make sure they understand how you came up with this policy and how it serves your customers.

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So you might be thinking, hey Omar, I love what you gave me today, but hey, how many days should my refund policy be? Should it be 14 days? 30 days? 90 days? 180 days? This is completely up to you and to be honest, it's going to take some experimentation. It's okay if you change a refund policy to see what best serves your customer, but at the same time make sure that it's easy for you to implement. If you find it hard to implement a refund policy that's too generous, that then it's going to be hard for you to serve all your customers properly. Walmart is able to give a crazy, crazy refund policy. I think it's 90 days or something like that because they have the manpower and they have the technology and they have the procedures and they have the revenue to be able to, you know, recoup those losses month in, month out. But if you're a small business and you're trying to figure things out, it's okay to start out with a 30 day money back guarantee or 30 back refund policy and see how it goes. As long as it's fair, as long as it's serving your customers, it's clearly communicated and it's easy to actually do to refund any of your products, then you're good to go. This goes for, you know, soft products as well. Whether you're a software company or you're selling mobile apps or whatever it is. In the last couple years I've been buying some WordPress plugins from a company called Thrive. Thrivethemes. The founder, Shane Malah really caught my eye in a video I saw on YouTube and I started to use his products. I bought several his products, but one of the products I used just didn't serve my needs and I just needed a refund and, and I remember sending out a request for a refund with them and getting the refund instantly, like literally within minutes. I paid by PayPal. So it was really quick. But the point was is that they didn't ask me any questions. It was pain free. They were like, hey, we're really sorry they didn't work out. We already issued the refund. Please feel free to check out our other products or recommend us to anybody else. And it was just so pleasant. This is why I'm mentioning them on the show right now. They're doing this right and the mention is probably worth a whole lot more than what I paid on the product itself. And it's not because I'm saying it on this podcast. If anybody gives a referral and gives a recommendation that's worth gold. Most people will go with a recommendation. They don't want to shop around, they don't want to do their homework. If you get a recommendation, they usually go with it. Thank you so much for listening to today's episode. That wraps it up tomorrow's free ride Friday. So make sure you hang on to the end of the episode tomorrow to Hear who won this week's free ride. If you want to win a free ride to one of our programs, easy course or 30 day course on how to build your own online course, you can check it out at EasyCourse co. It's a $500 value, but you can win it for free. Just leave us an iTunes rating and review and you automatically enter our weekly random draw. Just listen on a Friday to see if you won. All right, that's it for me, guys. But before I go, I want to leave you with this. Business is dynamic. You can't just set things in stone and forget about them. You may want to look at your refund policy, you know, periodically every six months or so and see how it's working. See if it's serving your customers and serving your business. Same thing goes with your trial, Same goes with your prices. Same goes with your procedures and your customer service team. There's always room for improvement and things change in business. Five years ago, people really expected to have phone support when it comes to customer service. Now people don't want phone support. They actually prefer online live chat because it's just faster. So you may need to change things because times have changed. All right, thank you so much for listening to the show. I'll check you in tomorrow's episode. I'll see you then. Take care.

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