Studies have widely shown that the more generous and flexible an online company is with their return policy, the more likely they are to keep a customer loyal. This leads to a customer having more confidence and loyalty to your brand, which can be thought of as a form of chargeback prevention.
One e-commerce retailer provided a testimony to their success from implementing a 365-day return policy and free, 2-way shipping. “Our best customers have the highest returns rates, but they are also the ones that spend the most money with us and are our most profitable customers,” said Zappos V.P. of Services & Operations Craig Adkins.
The goal of reforming a return policy is to increase customer satisfaction while avoiding unnecessary chargebacks that are within a merchant’s control. While refunds are costly, they pale in comparison to chargeback fees and the risk of losing your merchant account.
Why Chargebacks Matter
Chargebacks matter because the card associations (Visa, Mastercard, Discover, Amex) and the banks have simplified the process for customers to file a dispute. Unfortunately, when chargebacks begin to climb, and exceed 1%, your payment processor may shut down the account and freeze funds. For eCommerce businesses the inability to process payments means they are out of business.
Chargebacks can be fought, but it can be an onerous process to gather the evidence necessary to win the dispute, and it is an uphill battle as banks will generally side with the customer. However, it is important for merchants to take preemptive steps such as implementing tracking numbers, validating delivery, and other evidence necessary to win the dispute because banks will consider win/loss ratio when evaluating the account. There are also chargeback management companies and CRM’s that streamline this process.
Issuing Refunds as Chargeback Prevention
Both online and brick and mortar companies who encounter an unhappy customer are best served by offering a full refund. This process builds customer trust and is vital in every industry. A full-refund policy is recognized as a ‘best practice’ and eventually leads to a better merchant account processing at the lowest rate.
Another approach some merchants use to recoup some of their costs is to offer the customer the opportunity to keep the product but offering a partial refund in lieu of a full refund. This can work well for subscription models where the customer did not cancel prior to shipping.
How to Avoid Disputes & Chargebacks by Improving Customer Service
A customer wants to spend money and make an exchange with ease. It is important to make sure customers can contact you easily to address any issues that arise. Being accessible so customers contact you first will give you the opportunity to work out the issue privately and negate the need for them to file a chargeback with their bank. Here’s a few tips to improve their experience with your company:
- Offer 24/7 Customer Service:
Forrester Research found that 44% of online consumers say that having questions answered by a live person, while in the middle of an online purchase, is one of the most important features a website can offer. Furthermore, another survey found that 38% of respondents have made purchases due to a live chat session.
- Include Reviews:
Over 70% of Americans say that they look at reviews before making a purchase decision. And nearly 63% of consumers indicate they are more likely to purchase from a site if it has product ratings and reviews. In addition to a high quality e-commerce site that’s engaging, it’s essential to give customers an outlet for talking about your product. There’s a psychological phenomenon known as social proof in which a consumer is likely to be persuaded based on the thoughts and opinions of other buyers.
- Prioritize a Customer’s Happiness:
Excellent customer service is accomplished by helping your customers feel valued and appreciated. Personal touches like thank you notes, gift cards, and other personal follow ups go a long way. Simply listening to feedback in the spirit of genuinely wanting to help them will create an experience they’re likely to remember.
- Maintain Excellent Logistics & Fulfillment:
In the always-on, always-connected world, customers expect immediate confirmations and emailed receipts when they place orders online. A good CRM program can automate this process.
- Implement a Billing Support Hotline:
Providing customers with a dedicated, toll-free number and email address will alleviate their concerns and build good will. High risk businesses that are highly accessible to customers have been shown to increase customer loyalty and decrease chargeback and refund ratios.
If you’re experiencing a high-level of chargebacks, we’re here to help. DigiPay offers real-time alerts and transaction analytics to monitor and prevent fraudulent transactions. To schedule your free appointment, fill out the form below and we’ll be in touch shortly.