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.
How to Deal with Unhappy Customers
I’ve found there are five proven ways to successfully deal with unhappy customers. And who knows … you may even turn them into raving fans.
1. Handle it quickly.
The worst thing you can ever do as a business owner is let 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. In this day and age, that isn’t a risk you can afford to take.
Acknowledge the problem, communicate that you are diligently working on a solution and share an estimated or firm date as to when the solution will be fully rectified.
2. 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 probing questions that will 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?
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.
3. 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? If your products and services are an acceptable standard of quality then you have nothing to worry about.
4. Bend the rules.
You should clearly state your return policy on all customer-facing areas — your receipts, packing slips, and website — so customers are properly informed upfront, prior to purchase. However, you should still treat each complaint on a case by case basis.
If you have a 30 day return policy and a customer misses it by a week, it’s a lot easier (and will turn out much better) if you 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.
5. Follow up with the customer promptly.
After you’ve dealt with an unsatisfied customer, don’t forget the follow up. Now that your team has successfully resolved the problem, contact the customer and let them know precisely when the refund should applied to their account and offer adequate contact information, for future concerns. This is a step that most companies skip, but it is crucial in maintaining good relationships.
Lea Richards is the founder and owner of Pig of the Month BBQ, a nationwide mail order barbecue company. 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. She 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, Thrillist, and Good Morning America among others.