How to deal with refunds and chargebacks

I had to refund a client of mine $8,000 the other day.

The money hurt, but what sucked the most was knowing I simply couldn’t deliver on the value I originally promised.

Sometimes these things happen in business. All you can do is learn and get better. 

But NEVER compromise your moral compass for a few grand here and there.

Because if you do?

Your reputation will sink. And over time, your reputation will make or break your business.

In the world of DTC E-Commerce, refunds and chargebacks are common occurrences.

I know a lot of business owners who try and fight every last one of them.

“No refund policy, 0 exceptions”

“If it’s on sale, no refunds” (while technically the entire store is on sale, lol)

Sure, you might save 1% - 3% of revenue.

But you’re also missing out on positive word of mouth for your brand and reduced risk on your payment processor.

And yeah, you’re right. Not everyone who asks for a refund is honest about it. They’re out to game the system. And that’s okay. Because truthfully, you don’t want those people as your customers anyway.

Over time, you’ll see the compounding effects of operating this way. Especially as you start to compete with the big names in your industry. People talk. Reddit threads, yelp reviews, better business bureau, etc. If you have a reputation for being stingy as a business and never refunding, potential customers WILL know about it.

To me, that’s worth the short-term loss of 1% - 3% of revenue.

Because it’ll allow me to scale quicker and harder long-term.

Alright, nuff said.

Till next week,