- Passionate Income
- Posts
- Refund Reduction Hacks
952 Words | 3 Min 57 Sec Read
Today we’ll be discussing a strategy for reducing refunds and chargebacks.
While it’s great to make sales, it’s equally important to make sure that revenue stays inside your business instead of flowing back out.
Let’s dive in.
🚀 Exclusive Training: Entrepreneur CreatorKarro Shares His Secrets!
Explode your Instagram and monetize like a pro. Watch our exclusive training with CreatorKarro, where you'll learn how he grew from 0 to 163k followers (now 511k) and turned his passion into a $50k/month revenue stream.
What You'll Learn:
Instagram Growth Strategies: Gain hundreds of thousands of followers.
Monetization Techniques: Transform your followers into buyers.
Proven Tips and Tricks: Time-tested tactics to success.
Let's face it: We as entrepreneurs work hard to make sales.
Which is why making a sale and having to refund someone is so painful:
Per the concept of Loss Aversion, having the money hit our account - and then having to send it back - is more psychologically painful than the pleasure we gained from making the sale in the first place.
And if it's a dreaded chargeback, the fees that get added on top of the refund make the situation even worse.
Sure, if you're selling tens of thousands of $1 gadgets - or even low ticket physical products - refunds come with the territory.
However, if you're selling coaching, consulting, agency services or even high ticket physical products, just one refund or chargeback can destroy your cash flow projections (and your peace of mind).
So how can you reduce refunds and chargebacks?
While this is more relevant to Done With You (DWY) and Done For You (DFY) services, this strategy can also be used for physical products.
Long story short, when a prospect signs up with us (or buys our thing), they're at peak emotional excitement. Mainly because they're thinking about how much their life is going to change, how awesome everything is going to be, how perfectly it's going to work, etc
But as you've likely experienced yourself, those emotions can wear off fast. Especially when it comes to something intangible, like coaching or consulting (as is discussed in the highly recommended book Selling the Invisible).
Within a matter of days (if not hours), the prospect starts to doubt themselves. Especially once that charges hits their credit card, at which point their investment / purchase becomes real.
"Should I really have spent $4,000 on this?"
"OMG what if this doesn't work?"
"I'm still in the refund window. Maybe I should ask for it..."
The list of doubts that race through a prospect's mind are endless.
So how do we overcome these fears, while cementing the idea they made a wise purchase and that everything will be fine?
By communicating ASAP after the purchase is made.
Let people know what's going to happen immediately, before midnight, tomorrow and over the coming days.
Doesn't matter how dense or boring the follow up is: You have to communicate about it. Mainly because what drives clients/customers into crippling doubt is uncertainty around what's going to happen next.
Which makes total sense:
Once a scammer gets someone's money, they usually disappear / stop responding / block their target on social media.
Meaning, if you stop communicating as soon as someone pays, you're sending scammer vibes. The more effective solution?
Do the opposite: Over-communicate.
Call your new client and let them know you got the payment and what steps come next. If you're selling physical products, use automations to send a checklist outlining every step of your shipping process and which links they can use to check on the status of their order.
Second, sending custom, handwritten onboarding letters (and/or gifts) can go a long way to retaining clients.
While this might not be possible if you're selling physical products at scale, this works incredibly well for services businesses that deal with a smaller number of high-touch clients/patients.
Long story short, sending a gift or hand-written letter shows you're willing to go above and beyond to demonstrate the importance of the relationship.
Mainly because (once again), a scammer would never do such a thing.
Further, most companies have become so hardcore digital almost nobody does anything in the physical world anymore. And because of that, a hand-written letter or gift stands out exponentially more than any email or Zoom call does.
Third and last, we recommend you solicit feedback early and often.
If you think about the companies whose products and services left a bad taste in your mouth, odds are it's the ones who put on a show to get the sale, then completely changed their tune once you paid.
In my experience, these companies don't give two shits how you feel about your experience with them. To the point they don't even care if you leave them a bad review.
On the flip side, soliciting feedback shows you're interested in improving your product or service. It shows you care about your client's experience and whether or not they're satisfied.
In conclusion, avoiding refunds and chargebacks is easier than people think.
Doing so just requires a bit of effort.
But when you consider how hard you work to get a sale, it makes sense to invest a tiny bit of effort into making sure the profit from that sale doesn't flow back out of your business.
💡 Takeaway: By over-communicating immediately after the transaction takes place, sending hand-written letters or gifts, and soliciting feedback, entrepreneurs can radically reduce their refund and chargeback rates.
🎁 Resources:
FREE COURSE: Build a Faceless IG Page (from a guy with 10M+ followers)
