jcCommerce

I Love to Give Refunds… Really.

13th September, 2007 - Posted by Chance - No Comments

As Secure Delivery approaches 100 free and paid users (100!) we have received approximately 25 unique issues in our support tracking system. Of these 25 or so tickets, around 10 of them were anywhere from 1% to 100% our fault. Be it a bug, poor or confusing instructions, or something just plain not working- Secure Delivery is a fairly rich web application with over 20,000 lines of code, and early adopters are bound to find something we screwed up on somewhere… after all we’re human too.

What is the first thing I do when I find out we could have done something better?

I issue a refund for that month of service. No questions asked, no strings. I give them their money back and sincerely apologize for the inconvenience I have caused them.

What does issuing a refund do?

First of all, it makes the customers a lot less irritated. Second, it recruits the customer as a troubleshooter- they actually want to help you track down the problem and correct it instead of just expecting you to “fix it now!” Third (and most important) it keeps the customer from canceling their subscription.

Secure Delivery is a subscription based service. As with any subscription service that relies on recurring payments user attrition- or “users quitting” in plain English- is a (and maybe “the”) main concern. Issuing a full or partial refund alleviates this concern for us.

After all if you paid $10 for something, it didn’t work as expected, and the guy who sold it to you gave your money back and worked with you to solve the problem… what is there to be mad about? Not only do you get to continue to use the service for free for the rest of the month, but you also get to work directly with the developers to tweak a feature to your liking. We fix all bugs in days (and usually within hours) so even if the customer can’t use the service as intended for a couple days they are still winners- getting the rest of the month free to boot.

Will this practice work in the long run?

I think so. I haven’t issued a refund in weeks because the bugs are all being discovered and ironed out. From a financial standpoint I am not worried about the bottom line because I know that while I had to give $10 back I am still going to make $110 more off of that happy customer for the rest of the year when its fixed to their liking.

Because of this practice we have never had a customer quit Secure Delivery in anger. Sure, we have had what I like to call “phantoms”, or people who subscribe, never set up a product in SD, and later quit without any communication with us, but never has a customer brought an issue up, got pissed off at the way we handled it, and quit.

While I am sure big business CEOs and the like would disagree, I care more about keeping the customer happy than making money off them. It is my firm belief that happy customers are the best sort of marketing you can get, and we need great word of mouth marketing. Happy customers don’t quit subscription services, and without massive user attrition the money will take care of itself.

I would love to hear your experiences with issuing refunds to your customers, and if you think I have gone off the deep end by giving money back to the customer without a fight.