January 28, 2012

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Refunds suck.

Plainly put, they hurt your cash flow and can potentially cause a major bout of self doubt.

No small business wants to believe that the products or services they sell are ever less than stellar. So when you get the dreaded e-mail or phone call asking for a refund, you very well may find yourself questioning everything single thing you do.

But, when a customer requests a refund or exchange — it can be a good thing. There are several ways to use these opportunities to your advantage.

Unwritten Laws of Customer Service

Generally, customers will request a refund if they are not completely satisfied with your product or service. It happens … it’s a part of running any business. Overall, your refund and chargeback statistics should be monitored closely. If you receive a high amount of refund requests it could mean a few things:

1. You haven’t clearly defined features and benefits

2. You haven’t identified the terms and disclaimers (if applicable)

3. The customer has changed his/her mind

4. Or, your products and services simply don’t live up to their claims

Either way, it is important to use fair and ethical behavior when dealing with customer service issues. Respond to refund requests correctly, to mitigate negative word-of-mouth (WOM). More importantly, if your customer service is repeatedly not living up to customer expectations, you could find yourself in a ‘war of words’ or find that your brand name has been smeared all over the Internet with negative product reviews.

For example, I recently worked with a company that had the worst customer service I have ever encountered. Ever. They shall remain nameless (well, sort of), but the experience was so bad that I (admittedly) went on all of my social networks and review sites and wrote a scathing review.

As a small business owner — you don’t want that – and it definitely doesn’t have to come to that.

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