Simple Strategies To Reduce Customer Refunds

Refunds are a persistent problem with many online businesses, especially with 20-30% of all items ordered online destined to be returned or declined. Whether it’s because of an incorrect size, product dissatisfaction, wrong delivery, or transaction challenges, returned products always attract one major headache: a refund. Since most online businesses use electronic payment methods, refund issues lead to chargebacks. The more persistent these challenges are, the more they affect your bottom line and your relationship with your customers. These strategies will help you reduce the recurrence of customer refunds.

  1. Make use of customer reviews

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Customer reviews do not only help shoppers; they can also give you insight into your customers’ main pain points, especially those unsatisfied with your offerings. This way, you can understand some of the main reasons why customers are unsatisfied with your products and make the necessary adjustments. Customer reviews have also been proven to affect buyers’ perception of product quality. Studies say that products that receive higher customer ratings mostly result in higher sales and lower return rates. So, encourage customer reviews and ratings of your products, but also focus on the negative reviews or criticisms and use them to address major challenges about your products that could affect sales. 

  1. Find ways to prevent unauthorized transactions

You’ll be surprised by how many times purchased items are returned simply because the transaction was unauthorized by the owner of the credit or bank account. You’ve probably heard of kids making unauthorized purchases with their parents’ credit cards or thieves and scammers doing the same thing. All these lead to product returns when found out, and most of these returned claims demand refunds, even if you’ve clearly stated your refund policies. Of course, failing to reverse such transactions, especially the ones proven to result from stolen identity or fraud can lead to serious customer dissatisfaction. The more such cases you experience in your ecommerce business, the more aggrieved, unsatisfied, and even peeved customers you’ll have. Losing these customers (and the associated revenue) is only a matter of time. To avoid this, find ways to prevent unauthorized transactions. You can take advantage of services like Address Verification and Card Verification Value to help you with credit card processing, PCI DSS compliance, Plaid verification, and other means of preventing unauthorized transactions. 

  1. Create a stellar refund request process

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Sometimes, all you can do is refund or reverse a transaction upon a customer’s order, and you want to ensure that the process is as stress-free as possible for both parties (especially for the customer). Many customers complain about ecommerce businesses deliberately trying to slow down or frustrate refund processes even when the customers have followed all the necessary instructions. Such situations only dent the business image and drive away potential customers. Creating a smooth refund process that allows customers to get their money back can actually work in your favor as the business owner. You’ll be able to build more trust with your customer base, and they’ll be more than willing to continue doing business with you. 

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