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How To Reduce Refunds With Five Simple Strategies

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Looking for a way to cut down on the amount of refunds you give out?

While refund requests are as inevitable as death and taxes, there are a few ways to reduce the number of customers that are throwing in the towel when it comes to your product or service. 

No matter how hard you try, not everybody will fall in love with your product or service the first time. And even if they do, there are lots of other reasons people request refunds rather than they didn’t like the product.

  • Their financial circumstance has changed
  • They purchased the incorrect product
  • The original purchaser moved organizations
  • They are suffering from buyer’s remorse
  • The project they were using it for was cancelled

These are all scenarios we have had direct experience with. Project abandonment being a particularly common one. It’s also common that we receive extremely positive feedback about our products ahead of the refund request as we rarely give refunds based on the merits of the products alone.

Refund requests are a natural part of the customer journey. And unlike what most people believe, it does not have to be the end of the customer journey.

In the post, we will talk about how you can mitigate refunds, reduce them, and also how you can ensure a refund is not the end of the customer journey.

Make sure your Refund Policy is clear & visible!

While some businesses try to bury their policy, we post our refund policy in as many places as possible. 

At Groundhogg, we have a 14 day money back guarantee policy, and we make sure that easy to find at all times. In fact, it’s on every single page of our site.

  • On the pricing page above and below the pricing options.
  • On the individual product pages alongside the product description.
  • In the site footer on every dingle page.
  • On the checkout page above the buy button.

Having your refund policy readily available accomplishes a few things that will increase your chances of making a sales.

  • It establishes trust, it’s proven that companies which make their terms clear are more trustworthy than those who do not.
  • We live in a buyer beware economy, buyers like to familiarize themselves with reputable organisations.
  • People are more willing to buy with a refund policy available because they know they can request a refund if they are not satisfied with the product.

What kind of refund policy is best?

Well, it of course depends on what your selling. Creating a policy for a product company is much simpler than for a service company.

Here are a few suggestions to get you started.

  • The simpler, the better. Customers do not want to read hundreds of lines of fine print to learn whether they qualify for a refund, if your policy is confusing, kiss that sales good bye.
  • Set time limits on your policy, 14-30 days is what we’ve seen work well.
  • The “no questions asked” policy is a sure fire way to coax a sale through. If you place a lot of conditions on a refund you risk making it seam too difficult for the customer to seek recourse.

Feel free to look at our refund policy for inspiration!

A stellar refund request process is essential!

A refund request process is the system that your customer has to go through to request their money back. I think a lot of companies make this process top short, or too complicated.

If your process is a simple form and a subsequent refund, while effective at getting customers their money back, you are limiting yourself and your sales by not offering the customer alternatives options to a refund.

On the other hand, making it too long and complicated will ensure a 1 star review from a dissatisfied customer!

The most effective process is somewhere in the middle, not too short, but not so long that it would upset the customer.

Groundhogg’s refund request process:

We start by asking the customer to review our refund policy. We do this because the customer can often qualify, or disqualify themselves from the refund process by double checking that their purchase matches the required conditions.

Letting a customer discover themselves that they don’t qualify will be a more positive experience than telling them the don’t qualify over an email.

Once they confirmed they’ve read the policy, we ask them if they have submitted a support ticket for the problem that they are facing (if they are requesting the refund on the basis of a technical issue or some other issue). If they haven’t and perhaps didn’t know they had that option we direct them to the support channel. 

Failing that, we then ask if they would like to work with our customer success agents. We will get on a call to do implementation and offer more personalized service etc. We don’t do many of these, mostly because most customer do not get here ;). From experience of doing lots of calls, taking the time out of the day to walk a customer through a problem will have lasting positive effects on their customer lifetime.

If they refuse, we ask them if they would like to work with one of our many amazing partners to help plan out a business strategy that will work with Groundhogg. We’re getting close to the end of the process…

If all else fails, ask them if they are sure they want a refund. We remind them of all the benefits they will lose out on by having their funds returned. If they decide to follow through with the refund process, there is nothing more you could have done. It’s now time to make good on your policy.

When creating a refund form, it’s always important to ask people why they want a refund. These answers can give you context about a situation or and issue with your product that you weren’t aware of. This information can lead you to create better tools, systems and process that will prevent similar refund requests in the future.

Hit your customers with a Loss Reminder

One of the best ways that you can prevent a refund is by reminding the customer what they would be losing if they were to give up on your product. 

By reviewing the things that a customer will not have after submitting their request, it could encourage them to stay with your product. 

When people request a refund for Groundhogg, we let them know that this means they will miss out on software updates, support, programs, mastermind calls, etc. 

Never slam the door in the customer’s face!

A lot of businesses treat the refund process like it is the end of a relationship with a customer, when often,  it can be just the beginning

If you provide the customer with a good refund experience, they will leave with a pleasant taste in their mouth and will be more inclined to come back if they ever need your product again for a different situation.

If you make it hard to receive a refund, don’t email back etc. it leaves a bad impression, and the customer will feel motivated to never return and trust you with their money again.

At Groundhogg, about 15-20% of those who have submitted a refund request have repurchased the product in the next three months. 

Send a Hail Mary email!

Depending on your service, you can send the “Hail Mary” email to customers who have requested a refund.

Tell the customer that if they change their mind and want to give your product another shot that they can use a discount code on the next purchase. 

Put a time limit on this discount code (like within the next three days) and make sure the code is only for the first year or first billing period. 

Example of a Hail Mary email.

In conclusion…

It can be counterproductive to make the refund process difficult, it can also be counterproductive to make it too short.

By implementing an essential refund process you can both mitigate refunds, and increase the possibility of a returning client in the future.

You can build your own refund process with Groundhogg.  To get started with Groundhogg today, make sure to register for our free Official Quickstart Course.

Have any other ways to make handling and mitigating refunds? Leave your ideas in the comments below. 

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Adrian Tobey

Adrian Tobey

Adrian is the founder and lead developer of Groundhogg. He believes that marketing automation should be simple and accessible so any business can use it to grow.

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