MBA1450 Q&A Wednesday: Should I refund customers past the refund deadline?

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Foreign. Welcome to the Hundred Dollar MBA Show. Because time is money. That's why we deliver 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 listeners. If you have a question you want to ask, just email me over@omar00mba.net and I'll make sure to answer it right here on Q and A Wednesday. Today's question is from Patty and Patty asks should I refund my customers past the refund deadline? Hey Omar, my product has a 30 day money back guarantee, but on occasion I have customers that email me past day 30 asking for a refund. They often mention that they didn't use the course or don't have time for it and therefore want their money. Sometimes this is true and they did not use the course, but at times it's not. Does it really matter? Should I give them their money back or should I have a hard and fast rule with my refund policy? Thanks for your help Omar. Well Patty, I'm here to help and it's going to be the topic of today's Q and A Wednesday. Refunds are very interesting, especially when they're past your policy. You put this policy in place for a reason so you don't have to deal with this right? But the world is never straightforward. You're going to have these scenarios. What do you do? Should he stick to your policies and just face whatever music you face, like a chargeback or IRA customer or should he be flexible? That's what we discuss in today's episode. This is actually quite common and something that we have faced over and over in our business in different scenarios. So I'm going to share with you what works, what doesn't, and how to make a decision for your business. Let's get into it. Let's get down to business. In today's Q and A Wednesday's episode, Patti asks, should I refund customers past my refund period or policy? A very good question. So I want to start off by saying that I know companies that have a very hard and fast rule. If it's day 31, they do not refund the customer for any reason. They have a policy and that's it. They refuse the customer from refunding and they just deal with whatever happens because of that, whether the customer just accepts it and says, yep, fair enough, I'm past the 30 day money back guarantee or whatever the policy is. Or they might go to their credit card and ask for a chargeback and then you have to fight that chargeback by proving that you know they have breached your policy. You may win the chargeback, you may not. Sometimes the credit card companies will side with their customers even though you have a valid reason. This is just how it is. I know it's unfair, but that's how credit card companies are. Or even worse, the customer really gets upset and starts badmouthing you all over town or all over the Internet. The issue is, is that they'll never kind of tell the full story. They'll just say they stole my money, they took my money, they refused to give me my money back, I didn't use the product, all that kind of stuff. And of course you can reply on social or whatever it's posted, but you can't help but look like you're being defensive. So this is a decision you need to make as a company and often is a decision that's based on how often this actually happens, is it worth the trouble that it may cause? So in my company, I've come up with an actual formula and that's the 1% rule. And it's if I have more than 1% of my customers asking for refunds past the policy, you know, I'm not asking for refunds within the policy past the, you know, the deadline, then it's going to cost me more than I expect. So say, for example, you have a hundred customers. For every 100 customers, one person will Ask for a refund past the policy, which is quite rare. I'm going to lose X amount of money. Now, it depends on the price of your product or your service. But if you're in the hundreds, even thousands, this can add up as you start to have thousands of customers month over month, year over year. But if it's under 1%, 1% or less, then in my book it's just not worth the battle. Actually, the loss is worth it because I'm going to have that person leave a happy camper even though they're past the policy and they're happy. They may even spread the word and say this company's awesome to give me my money back even though I didn't deserve it. It's rare that people will actually, you know, say that publicly, but it could happen. And you know, having not to deal with chargebacks and things like that might be worth it. If the percentage of customers is quite low, I say less than 1%. So you need to factor in how many people are actually asking for refunds to pass the policy. The next thing you have to factor is the price of your product or service. If 1% of your customers or even 2% of your customers asking for refund and your product is $10, not a big deal. But if your product is $500 or $5,000, that's a different story. The next is you have to have some sort of policy for the policy or I should say a policy for you breaking your policy. You know, there's a difference between somebody asking for a refund on day 31, on a 30 day money back guarantee and, and somebody asking for a refund a year later. Some things have to be non negotiables in your business. You have to draw the line somewhere, even internally. So even internally you say, hey, if you know they asked for a refund within 15 days of after the refund policy, we're going to let it go. It's an unwritten rule kind of thing. If you're going to be flexible, if you're not going to be, you know, by the book and say 30 days is 30 days, but you got to have some sort of, you know, internal line they cannot cross so that your team, your customer service team or, or anybody else you hired later down the line knows what the rule is, knows like black and white what to do. For example, we ran a promo when we first launched Webinar Ninja with Appsumo and where Appsumo sold Webinar Ninja for us and the customer would have a redemption code, they would have to redeem with us because they got a special deal, they would have to redeem that code. Part of the deal on AppSumo is that they were told, you have 60 days to redeem this code. So redeem this code so you can activate your account. You have 60 days to do that. After that, this code expires. So we had a lot of customers come to us and say, oh, I forgot to redeem it. It was day 61 67. We even extended it to a year. We were, like, really generous about it. But we recently had somebody three years later asking to redeem the code. And for us, we drew the law in a year, even though the policy between them and AppSumo was 60 days. So even if you're being generous, you have to have some line they cannot cross. Now, that kind of sums up what I recommend when it comes to refunding people past the policy period. I want you to put that in a bucket, put that aside for a moment, and think about something totally different. I want you to think about how you can get information from the person that's trying to cancel or trying to get a refund about why they want a refund. This is actually more important than the actual giving them their money back because you want to stop the bleeding. You want to stop this from happening in the future. You want to find out what. Why they didn't get value from this product, why didn't you use it, why are they looking for their money back? And even if it means getting on a phone call in exchange for allowing this refund to go through, hey, I'd love to help you with this refund, but I got to get on a phone call with you to learn a little bit more about your situation so we can help you out. Most people will agree to that because they want their money back. Get on a phone call and find out, hey, why did you not use it? Was the onboarding not useful? Did you feel not supported? Did you not have the right materials? You want to find out how you can improve the experience for customers so they can really get the value out of your product and never want to ask for a refund. Now, I admit I've done this many times. I've had these calls with customers, and about 1 in 10 of the customers will just be frank and be like, you know what? I made an impulse buy and I need the money. I need that money back on my account. I had people telling me, I'm really sorry, but I need a refund because I ran out of money and I don't have money to buy gifts for my kids for Christmas. Seriously. I got that email, but I still had a call with that person. I still reached out to them, learned a little bit more about their situation. We gave the refund, but I want to get some information in exchange. So it's not a total loss of money. Right. I'm doing market research, I'm finding out more about my customers, finding out how I can tweak my experience for them. And yes, you're going to get that 1 in 10 or maybe even less people that are just looking to make their money back somehow and you can't avoid that. You're going to have people like that. And that's just the cost of having a business. It's okay. Don't let it get to you and don't feel like you need to fix that as well. That's just going to happen. Especially if your product is, you know, in the low to middle range price. If it's like 50, $100, $200. People don't part with $5,010,000 when they're on a tight budget. It just doesn't happen.

Hey Fidelity, Can I get a second opinion on stocks in the Fidelity app?

With Fidelity it's easy to get an outside opinion from independent experts in a single score. And then when you're ready, trade US stocks and ETFs with no commissions.

That's right.

I am always right.

Investing involves risk, including risk of loss, online US equity trades and ETFs and retail fidelity account sell order assessment fee not included. Some account types and securities excluded. Details@fidelity.com commissions Fidelity Brokerage Services LLC Member NYSE, SIPC.

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Just bring your number. $30 first month and $25 after with autopay not available. If with Metro or T Mobile in the past 180 days. To wrap up today's Q and A Wednesday's question from Patty Should I refund my customers past a refund policy? You gotta weigh up what it's gonna cost you if you don't. And what it's gonna cost you if you do. I came up with my own system, the 1% rule. And then even with that rule, you have to have some sort of internal hard deadline, a line that cannot cross, a non negotiable. Because at some point it just gets ridiculous, right? What's important here is you wanna teach your team, your system, your judgment system. Because you can't make all, all the time. You can't be up 24 hours a day. As long as you have some sort of criteria for them to follow, you can pass that on. It's like a standard operating procedure and they know how to follow it. If you're looking for a clean cut, easy way, just stick to the policy. And regardless of what they say, that's the policy. The rules are the rules. Most big companies, that's how it is, it's non negotiable. If you buy a T shirt from a department store and the refund policy is 90 days and you return it, you know, 95 days later, they'll say no. That's always an option. Just know, what are the consequences of doing that? Am I happy to absorb those consequences? If so, it's probably the straightforward way of doing things. You know your customers and your market well so you can make those decisions. Thank you so much for listening to today's episode. If you have any questions you want answered, just email me over@omar00mba.net I'll make sure to answer your question right here on Q and A Wednesday. Before we go, I want you to do me a huge favor. Hit subscribe right now on whatever you use to listen to. Podcasts, whether it's Stitcher, Radio, Spotify, Apple Podcasts, Overcast. By hitting subscribe, you help support the show. It's absolutely free to hit subscribe. In fact, you get a whole bunch of amazing benefits. Number one, when we release a new episode, it's available right on your device when it's ready. Number two, you have access to over 1400 business lessons from the 100 MBA show in the archives. And. And the only way to have access to it is to hit subscribe. And three, you help grow the show and support us so we can continue to publish great business lessons. Thanks in advance for doing that. Right now, before I go, I want to leave you with this. Sometimes we forget that business is really about dealing with people, dealing personalities, dealing with mentalities. Yes, it's a product and value and price and numbers, but at the end of the day, we are serving other human beings. So when you're setting up your policies. Whether it's a trial or a refund policy, make sure it's suitable for your customers, that it's fair, that it makes sense, and it allows them to actually get some value, to have a real risk reversal so they feel like, hey, if this product's not for me, I can always refund it. If you're being fair and you're putting your customers interest in mind, then following that policy is also fair. Thank you so much for listening, and I'll check you in tomorrow's episode. I'll see you then. Take care. Hey, Fidelity. How can I remember to invest every month?

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