How Refunds Make You a Better Business

by / ⠀Startup Advice / November 21, 2011

Refunds suck. Plainly put, they hurt your cash flow and cause a major bout of self doubt. No 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.

This is good. There are several ways to use this information to your advantage.

Be warned though: if you don’t respond to refund requests in the right ways you might find yourself in a war of words with your business being smeared all over the Internet.

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 and handled so poorly that I went on ALL of my social networks and review sites and made sure to write a scathing review. You don’t want that – and it definitely doesn’t have to come to that. Read on and learn the best way of dealing with unhappy customers.

The Unwritten Laws of Customer Service

Handle it quickly. The worst thing you can ever do as a business owner is let your unhappy customers wait around while you get back with them. It makes them feel second rate and they just get angrier by the day. An unhappy customer that’s been blown off for a week is one that is much more likely to spread the word to everyone they know…and in this day and age that isn’t a risk you can afford to take. Acknowledge that you’ve heard the problem, are working on a solution and will get back with them within 24 hours.

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Make like a detective. It’s never a good policy to call the customer a liar or question what really happened, but you can ask some probing questions that can provide a lot of great feedback. Try asking one or two open ended questions like, “While I work on this problem for you, could you tell me a bit more about why you’re unhappy with our company/product?” or “What do you think we can improve on in the future? All feedback is welcome.” A lot of times you’ll realize it was a disconnect in your marketing or instructions and not the product itself. Cue sigh of relief.

Make sure your return policy is up to snuff. My company stands by our products. We make the best quality foods we can and offer them at a competitive price. Because we truly believe in our company we offer a 100% money back guarantee, no questions asked. And you should too.

I’m always wary about a business that has a no returns policy. How can you expect people to trust you and work with you if they know they’re out of luck if anything goes wrong? Offer a return policy that feels a little bit ridiculous and makes you a bit nervous. If your products are up to snuff (which they absolutely should be!) they you should have nothing to worry about.

Bend the rules. You should clearly have your return policy stated on your receipts, packing slips, and website so every customer always knows your return policy. But, you should still treat each complaint on a case by case basis. If you happen to have a 90 day return policy and a customer misses it by a week – it’s a lot easier and will turn out much better – if you just let it slide. Remember that great companies are often built on customer service and if you can establish a good reputation it’s worth more than the cost of that refund.

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Don’t forget the follow up. After you’ve successfully resolved the problem don’t forget to follow up with the customer and let them know the money should be back in their account within a week and offer a personal phone number and e-mail to contact in case they have any more issues. This step is often the one most companies skip, but it is crucial in maintaining good relationships.

Lea Richards Lea is the founder and owner of Pig of the Month BBQ, a nationwide mail order barbecue company that was founded in 2010 as a bootstrapped venture. She quickly learned how to leverage her marketing and PR savvy to grow her business on the cheap and now shares this knowledge with other entrepreneurs around the country. She has been mentioned in the New York Times, Food & Wine Magazine, Food Network Magazine, and Good Morning America among others.

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.

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