How to cut down on refunds

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Creative Commons License photo credit: TeryKats

Do you have problems with too many sales turning into refunds? Or almost-sales turning into no-sales?

Do your demonstration projects frequently fail to reach the buying stage?

Does return-friendly Costco look like a tough return desk negotiator compared to you?

Do people frequently add things to their shopping cart while on your website but decide not to buy them and click away? The industry term is “cart abandonment”.

Do you sell software by offering a free trial and think “if only 10% more people bought”, you’d be doing a lot better?

Do you lose sales or have refunds from people you think should have been perfect for your product?

If you answered “Yes” to at least one of these questions, you need to take steps to cut down on lost sales and reduce refunds. In marketing parlance, you want your sales to be “stickier”.

Where to look

The simplest way to start working on this is to look at the sales you lost. If you don’t keep track of when refunds occurred (by date, for example) and what caused them – start doing so.

Assuming you have a firm date-driven return policy, are you getting most of your refunds just before the end of your refund policy period? You might assume that you can’t combat this, but you can. Better qualifying of leads/prospects will help, at least in situations where you have that sort of buying process. Costco doesn’t ask if you can afford a 46″ LED television or if it’ll fit in your apartment/office, but not everything is sold off the shelf like that.

Doing well-timed things to help folks continue to see a high ROI out of their purchase will help. Training videos, calls or webinars delivered at strategic points in their timeline as a new customer, for example.

Imagine that you offer new car buyers a free oil change for the first year of ownership. While that starts off year one as a sales promo expense, it should end up creating a habit: “Change your oil here”, which produces long term service revenue and as a by-product gets your customer back into the store every 90 days or so.

If you fail to remind them about each free oil change, they might get it done somewhere else – breaking the habit before it starts. If you do the math, the revenue loss after year one is substantial. Worse, you may lose a future vehicle sale because that person isn’t eyeballing shiny new wheels once a quarter while waiting for the oil change. Make yourself an easy habit.

Trials and Tribulations

When it comes to products that are sold via 30 day trials and the like, cancellation timeframes should be examined closely. Just because everyone cancels on day 29 doesn’t mean they didn’t like your product. It might be that they underestimated how busy they were (imagine that) and never got to the point where they could give it a fair shake.

Or maybe they got confused, didn’t ask for help and gave up. That trial ends despite the fact that they were doing well with you until they became confused. Cancellation points can change as your offerings do, so pay attention. Sometimes the problem is as simple as helping people see the depth of the value you deliver.

Tiny little things, ill-timed, can devastate people’s confidence in your product or service.

Think about the last time you put something in a website shopping cart and then clicked away. The tiniest thing is enough to break your confidence (or attention) enough to say “Maybe next time” and cause you to click away. Do you watch to see what page is most frequently used just before a shopping cart is abandoned? That might be a clue that helps you fix a problem costing you thousands of dollars in sales.

Reducing refunds is really about catching the folks who might leave because you’re missing something. It’s not really about turning around a refund as it is doing a much better job of paying attention to the prospect’s needs as well as learning where the failure points are in the process people have to evaluate and use your product/service – and then addressing them.

Those failure points can be moved or even eliminated, if you pay attention.

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