Even before the holiday shopping rush ends, merchants are already managing refunds and exchanges while trying to keep customers happy and loyal. Without a crystal clear refund policy, businesses run the risk of confusing both customers and employees who are processing refunds. Remember, how your business handles returns sends a mighty message about your overall customer service.
Establishing a clear refund policy will build customer loyalty in the long run and provide a much happier customer experience at the point of transaction. Here’s how to make it work for your business and avoid costly chargebacks.
Clearly Communicate Your Returns Policy
First and foremost, communicate your returns policy as clearly as possible. Avoid future confusion by informing customers of your returns policy at the time and place of purchase. There will always be returns. Let your customers know how you will manage a return or exchange upfront, so you both know what to expect if a return is requested.
Post your return policy near the checkout area. For online purchases, include your returns policy clearly on the checkout screen. Receipts should include any limitations like “in-store credit only” or “exchanges only” should be listed on the receipt by the signature area.
According to Visa, disclosing your returns policy on the back of the receipt or in a separate contract requires providing a space for the cardholder’s signature or initials to confirm they received the information. Draw your customers attention to the policy, verify they know where to look for the details of your return policy, and ask for a signature.
Remember, too, that your returns policy and how you communicate this information to your customers is an important part of how you can dispute chargebacks with credit card issuers if you suspect abuse.
Decide What Limitations (if Any) Make Sense for Your Returns Policy
Some merchants may decide to place a time limit on returns. Imagine an outdoor sporting goods store that is fully stocked with snow and ski equipment. Having a 30-day returns window might make sense for this merchant to avoid returns that are out of season and either take up space for several months or must be deeply discounted to sell.
For the sake of customer experience, limitations on returns should be handled carefully. The best customer service option is a fast, easily accepted refund. Time or product limitations should be logical and clearly spelled out in your returns policy.
Again, communicate upfront any limitations on returns or exchanges at the point of sale. Remember to include this information on the front of sales receipts and post this information in the checkout area.
Process Refunds Immediately
When a customer requests a refund, process the refund immediately through the acquirer that processed the original transaction. Refunds should be deposited within 5 days of issuing the credit. Slow refunds could lead to a chargeback if the customer assumes the refund has not been issued. Issue refunds quickly and inform the customer it may take a few days to see the refund show up on their card.
If a refund can not be made to the originally charged credit card, cash or another form of credit may be issued. Be sure to document the credit and obtain the customer’s signature to confirm the refund.
Note that purchases made via a mobile device in a contactless environment (i.e. an app or digital wallet) should be processed much like a traditional refund. Cardholders may be required to verify their identity with a digital passcode or biometric authentication. This may vary from device to device and from application to application.
As a best practice, staple the sales slip for the refund to the original sales slip to provide your customer with a record of the complete transaction history.
Avoid Arguing Over Refunds
When a customer requests a refund, you might have an instant reaction to ask “why?” This could be misinterpreted as stalling or trying to argue the customer out of the refund. Following a truly question free refund policy is a better customer service choice and prevents customers from escalating the request to their card company, which may lead to a chargeback.
When a customer requests a return, it can be tempting to attempt gathering feedback. This might not be the best moment to pursue this information. Consider following up with a request for feedback after the refund has been issued and the customer’s request has been completed.
Syed Balkhi of the Young Entrepreneur Council found that after changing the workflow so customers were emailed a short request for feedback after refunds were issued, the information gained was considerably more useful. As he notes in an article for the Chicago Tribune, “People are more helpful when they’re happy. Angry customers often don’t give the most constructive feedback. By improving our refund workflow, we’ve received some very useful feedback.”
Train Your Team to Handle Refunds Consistently
Any member of your team that might handle refunds should know exactly how to proceed. For a consistent returns policy to work, it must be applied consistently. Train your team to understand the policy and how to issue refunds. If there are exceptions to the rules, train your team to seek guidance when appropriate.
At the end of the day, a happy, loyal customer is one that is truly pleased by every aspect of their transactions with your business. Successfully managing refunds will keep your clients happy and avoid complaints to credit card companies that may result in expensive chargeback fees.
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