MBA1340 Q&A Wednesday: How can I convince a customer they don’t need a refund?

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Hey O welcome to the Hunter Dollar MBA show, the business podcast for those who love to get better at business every day with their 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 today's episode is a Q and a Wednesday episode. On our Q and a Wednesday episodes, I answer a question from one of you, one of our listeners. If you have a question you want to ask, just email me over at omar@100mba.net Today's question is from William and William asks how can I convince a customer not to refund? Thanks for the question William. When a customer asks for a refund, they're asking for a refund for several different reasons or several possibilities why they want a refund. And what I want to do today is walk you through what are those possibilities? Because some of them, if you learn about them and find out a little bit more information, you can turn the customer around, you can keep that customer happy and keep them as a paying customer. But we'll also deal with the reality of how to deal with a customer that just simply wants a refund and there's really nothing you can do about it. This is an opportunity Actually, and we'll explain how you can actually capitalize on that opportunity to help your business, your brand, and possibly get that customer to sign up with you or buy from you in the future. So let's get into it. Let's get down to business. So in today's Q and A Wednesdays episode, William asks, how can I convince a customer not to refund? When customers are looking for a refund, whether it's an actual physical item with an E commerce store or they're canceling their subscription to your SaaS product and actually are asking for a refund too, it's not a good feeling because basically they want to take money out of your pocket. You've charged them and it's gone into your billing, it's gone into your bank account and you've kind of banked on that money. And now they're saying, hey, I want that money back. So for many of us, we don't want to deal with this issue. It's sort of a challenge that we'll all have to face at some point in our business, but we wish we didn't have to. But here's the reality. In today's business world, people want some sort of risk reversal. They want to be able to get a refund. And that's just the standard of business today. You can thank Walmart, you can thank Amazon, you can thank Innovation, right? But how do we deal with it? How do we try to turn them around? And if we can't turn them around, how can we make sure it's still a good experience and it benefits your business? So I don't know exactly, William, what your process is in terms of requesting a refund, but in that process, I highly recommend you collect information about why they want a refund, whether they're chatting with a customer service agent or they're on the phone, or they're doing some sort of online form. You need to learn why, because the reasons will vary and depending on the reason, you're going to take action. Now, the simplest reason that people refund, and it's actually pretty common, is they made a mistake, they ordered the wrong thing, it didn't work out, somebody else ordered it on their behalf and they forgot to cancel. There's no malice, they're not upset with you, they're not upset with the product, but it's just purely a mistake. And now some people will ask for a refund even if it's against your policy. So say, for example, you have a subscription based service like Netflix where you charge somebody every month and their subscription lapsed, and they realize, oh, a few days into their subscription, I got charged. I didn't want to be charged. I should have canceled beforehand. Can I get a refund now? It may not be according to your policies, meaning that as a subscription, hey, they don't get a refund because you charge them month over month, just like a gym membership. But customers still expect a refund. They don't actually read your policies. They don't actually make that comparison where, like, I wouldn't expect a refund for my gym. Why would I ever expect a refund from this service? So this is where your goodwill and your reputation's on the line here. And for the most part, at the very least, what you can do is a prorated refund. If it's a subscription, you know, you've used three days of that month. We're going to subtract that amount of money in terms of how much your monthly payment is and we'll refund you the rest. That's very fair and okay. You can also refund them the full amount if you like. But what if you stick to your guns and say, no, I will not refund them. That's against our policies. You can do that, and it's a numbers game and. And you can stick to your guns. But the problem is, is that most customers will be upset at that. They're going to voice their dissatisfaction to everybody that will hear it, everybody who listened to them, whether it's on social media, whether it's in person, whether it's, you know, over the phone or on a text message with their friend. And the question is, how much is that worth? How much damage is that? If it's pretty damaging or even if just one person hears about it, maybe the refund is not that bad. Obviously, we're talking about dollar amounts. We don't know how much you're charging or how much the refund is, but you need to make that call. For many companies, they refund without question because they don't want to deal with the headaches or the bad pr. There's so many ways people can review you or voice their opinion on social or in a Google review or something like that. So it's just not worth the headaches. The second reason why somebody would refund is they're not happy with the product. Something is wrong with it. It didn't fulfill on the prom they actually signed up for. Whether it's a service, a product, a SaaS product, a software, whatever it is, it's still very Important for you to get that information, to get that feedback. Why? Because you'll never be able to stop this from happening. You don't want another customer to cancel for this reason. So if they say, hey, I don't like it because it failed me or it's not good, or I had this problem, it's good to get that feedback so you can be able to correct that in your product or your service. Sometimes it's a small fix, sometimes it's just a little thing that you can do to. It's not going to take much time, or maybe it'll take a little bit of time, a week or so, and you can prevent this problem from happening ever again. So getting the feedback is very important. Again, whether it's on a chat, a phone call, a form, you got to find out why they're canceling or why they want a refund. Now if they're upset at that and they're just like, hey, I don't like it, I want a refund, you can turn them around if you can fix their problem. If you say, hey, the product doesn't do this, what if I can make sure it does do this? What if I can replace that product? If it's a physical product, what, with a product that does fulfill your needs and you can sweeten the pot a little bit and maybe give them some store credit. The point here is, is that you're keeping them a customer and you don't have to refund them. So let's take an example. Say, for example, they sign up for a software application and they're asking for a refund because it doesn't do what they wanted it to do. They give you feedback and you speak to your development team and you find out, hey, we can get this done in a week. So all you gotta do is just speak to that customer or email them and say, hey, good news. I spoke to my head of development and we can do this. We can actually give you what you want. We are willing to put the effort into delivering the exact solution you're looking for. All I would like in return is just to hold off your decision until you see what we've done for you. If I could give you what you're looking for, would you be happy to stay on? And most people will be so shocked that you actually made the effort, they'll say, yeah, why not? They don't have anything to lose. Worst case scenario, they'll wait a week, and if they don't like it, they'll just get the refund and you can make that clear to them. If you don't like what we've done or the solution that we come up with, I am happy to process that refund, no questions asked. And of course, if you want a refund right now, I'm happy to do that too. But we want to make sure that we fulfill your obligation. And of course, if you're going to sweep the pot, you're going to say, hey. And to show our appreciation for being patient, here's a free month, or here is a store credit or something like that, or where you show them, thank you for giving us feedback to improve the product. This helps people feel validated. Feels like you're hearing them and you're actually delivering on what they need. Most customers are not treated this way. And when you do this, they're happy to oblige. They're happy to do that. Obviously, you're gonna get people that say, no, just give me a refund. But in my experience, that is the minority. The majority are like, wow, you're gonna give me what I want? Great. Why? Because the switching costs and the time of trying something new or buying something else is a headache for them. If you're going to give them what they want and they've already have a relationship with you, they're like, cool, let's do it. So if they are complaining about something, if there's something that is not working, find out so you can fix it. You possibly can fix it sooner than later and you can hold off that return. You can hold off that refund. If for any reason you can't actually deliver on what they want in a quick fashion. Sometimes it could be more than a week, and sometimes it'd be a month still. Ask them, hey, how about we hold off until a month? I'll be happy to give you some credit or whatever it is to make them happy because we're going to deliver this solution to you, or we're going to replace your item with one that does what you wanted to do in a month time. Now, if it's too long for them to wait or it's like six months down the road for you, that's fine. Make sure they leave happy, give them that refund and thank them for trying us out. And ask them, hey, would it be okay if I emailed you, if I message you, if I called you, or once we have released or have created the solution you're looking for, we'd love to show it to you. And most people will be happy to. They feel like they're Part of the process and they got nothing to lose. They're getting their money back and they get to see a glimpse of what you have created for them. This allows them to leave happy and you still are building a relationship. You still have a relationship with them with their consent, which is great because they could become customers down the line. Now the third reason somebody would cancel is they don't understand the product or how to use it. And this is a really good customer to get because you're going to learn things and you can keep them. Let me give you an example. Let's say, for example, somebody has bought your software product and says, hey, I'd like a refund. I would like it to do xyz. And in fact your product does xyz. They just don't know about it. They just don't know you have those features or they didn't find where those features are. So a couple of things. One, you can easily win them over and prevent the refund by showing them, hey, actually we do xyz. Here's how to do it. Here's a tutorial. Let me walk you through it. So Happy, we could serve you and give you what you need. The next thing you're going to do as soon as you send that email or finish that phone call or that chat is speak to your team and find out how can you make it more apparent that your product offers xyz, whether it's on your sales pages, whether it's in your tutorials, whether it's an onboarding or some sort of pop up or chat message that shows up on the screen, if it's a physical product, whether it's a starter guide like a pamphlet that goes inside your product, maybe you need to change the design of the product or the ui, the experience so it's more apparent that you can do these things. We've had modified our software webinar Ninja so many times from this type of feedback where it wasn't clear that the product does this and we made sure it did. Whether it's with a tooltip, whether it's with a tutorial, whether it's with a guide, whether it's with just changing the ui again to make it more apparent, this is easy wins. This is low hanging fruit. When you get a customer that says, I wanted to do this and it doesn't do this, when it actually does, make sure you tell them not only yes, it does and this is how you do it, but we're going to change the product, we're going to change things so that it's easier to find and say thanks for the feedback. We're going to make sure that this has changed. I'm going to update you and say if you have any more feedback, let us know. We would love to hear from you so we can keep improving the product. You are helping us get better. People love feeling like they're doing something to improve a product, and those are really the three main reasons why people refund. They just simply want to refund. They made a mistake. They just want their money back. I mean, in that first category, some people just ask for a refund because they're tight on cash and they just want a refund from something they just bought. I know that sounds a little bit strange or even sad, but it's common. People do this and everybody's in a different situation economically, so it's totally okay. This happens. The second reason is you're not perfect. You know, knock it out of the park and have the perfect product from day one. People are going to say, I don't like this product because it doesn't do this. And in fact it doesn't do this. But you still can win them over by helping them hang on until you actually fulfill your promise as much as possible. Sweeten the pie. Give them something extra to help them feel like they are validated, that they feel appreciated, and to thank them for their patience. And the third reason? They think the product doesn't do something when it actually does. You're going to clarify that it does do that, show them how, and then tell them that you're going to make it more clear.

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Sxm to wrap up today's Q and A Wednesday's episode. Refunds are not fun, but let's deal with them in a way that helps our business, that helps our brand, that allows us to build long term relationships. I can't tell you how many customers have left us and then come back after we have provided what they're looking for. Even the customers that just asked for a refund because they weren't ready yet, they come back and they're happy when they are ready. Many of our customers shop around and try our competitors and realize you know what, Webinar Ninja was the best one. Let me go back and pay them for the long term. So think long term with this and make sure whatever happens, whatever is the result, the experience for the customer is delightful. Thank you so much for listening. And thank you William for your question for Q and A Wednesday. If you have a question, yes, you who are who's listening right now? If you have a question, just email me over at omar100mba.net we'll make sure that we answer it right here on Q and A Wednesday. Before I go, I want to leave you with this. Once you actually agree to the refund and you are going to give that refund, make this process as easy and seamless as possible for the customer if you can, without them doing anything at all. If they have to ship something back to you, it's great. If you can give them a shipping label, just process it for them as soon as you can and let them know when to expect it back on their card. Why? Because if it isn't efficient, if it isn't easy, it's they might get disgruntled even after you agree to the refund. They might ask for a chargeback via their bank and that's horrible for your payment processor relationship. You want to make sure you avoid chargebacks as much as possible. Thank you so much for listening to the $100 MBA show. I'll check you in tomorrow's episode. I'll see you then. Take.

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