Every business owner has experienced customer chargebacks. This is most likely to occur when the customer is unsatisfied with the product, did not receive their order, or experience fraudulent charges on their card. Business owners know that this is an unavoidable part of running a company, so they accept it as a necessary evil. Almost half of all business owners believe that nothing can be done about this situation or think that it is too expensive to control. The truth is; chargebacks are a costly part of owning a business. In fact, a successful business is looking at an average of nearly $15,000 in expenses per month. Is this avoidable? Not entirely, but it can be significantly reduced if the right steps are taken.
Here are 7 ways to minimize your chargeback numbers:
It is extremely common for customers to refute a charge because the name of the company is unrecognizable to them. If your business is “Frank’s Franks,” you want your credit card statements to reflect that exactly. Using another name can be confusing to customers, which may cause your company to lose money in the end.
Product descriptions are very important. If you have an online business the more detailed, honest, and accurate you are about your products the less likely a customer will be dissatisfied with their purchase and demand a chargeback. Unhappy customers are easily one of the top reasons for chargebacks, so always be upfront with your clients about your products and services.
When a customer makes a purchase that comes with a specific delivery date, your business should use proper shipping methods to make sure this happens. If the product is not received on time your customer may jump to the conclusion that they won’t be receiving it at all. Instead of contacting your company they may just demand a chargeback on their card. Prompt deliveries will help you avoid this situation.
Being good about issuing refunds is actually a great way to avoid chargebacks. Providing excellent customer service and easy refunds when necessary are key components to having a successful business. Refunds may seem like a money losing hassle, but it will help you avoid chargebacks and save your company money.
Customers can quickly become frustrated if they are unable reach your company to discuss a problem. They may lose their patience and automatically issue a chargeback because it is easier than contacting your business to get help from you to resolve the issue. When you allow yourself to be accessible to your customers you create happy customers, and satisfied customers are more likely to continue to spend money on your products and services.
Many companies offer a free trial period when they sign up for a subscription, but automatically charge the customer after the free trial period is over. Don’t do this. Most people only sign up because it is “free” and fail to realize that they will eventually be charged. This leads to unhappy customers and frequent chargebacks.
Each time a customer requests a chargeback they do so for a specific reason. When you know the details of the reason it can help you avoid the same thing from happening in the future. Sometimes a customer will issue a chargeback by claiming the purchase was fraudulent, but in reality they simply regret their purchase. This is another reason why it is important that your product descriptions are accurately detailed and you’re upfront about your refund policy.
Although chargebacks are frustrating, they are an unavoidable part of business. However, if you are diligent about following these 7 tips, you’ll reduce the amount of chargebacks your company experiences and save money in the long run.