Customer Experience

3 Questions to Ask Before Offering a Refund

There are plenty of ways to make customers happy without giving them exactly what they’re asking for.

Source: Olivier Le Moal / shutterstock

If you have an angry customer calling and demanding a refund, don’t panic. These days, huge retailers like Amazon are able to offer ridiculously generous return policies. That doesn’t mean your business has to do the same.

Refunds can be a major problem within a business, and you don’t necessarily want a reputation for constantly handing money back to customers. It may sound like a way to show your customers how much you care about them, but it can quickly spiral into a way people receive your products or services without compensating you fairly. Federal law only requires companies to give refunds if their products were defective, so if that isn’t the case, you have plenty of options that don’t involve either a refund or burning a bridge. Here are three questions you can ask either the unhappy customer or yourself before offering a refund to make sure a complete refund is truly the last resort.

  1. What is it about the product or service that hasn’t lived up to the customer’s expectations? Try and get specific with the customer as to why he or she is unhappy. For instance, if the customer is looking for a return on the business coaching investment, is it because more results were expected after a month? Or is it because the tips you’ve suggested have proven too difficult to implement? Or is it because the customer has decided to radically change his or her business? The answers the customer provides may help you make a better decision in terms of the refund and might also help you improve your business if the customer demonstrates that something you as a business provided honestly didn’t live up to your claims.
  2. Is there something you could offer instead of a refund that’s equally as valuable? Perhaps you could offer a new product in place of the old one, a significant discount code for future purchases, or another add-on that brings value to the customer without having to completely refund the customer’s money and end your relationship.
  3. Will refusing a refund damage your business in the long term? If this is a frequent customer who’s spent hundreds with you asking for a $10 refund, the answer seems clear—a small refund now could pay off in the future. Also, if you’re truly at fault and your customer has a large social media following or the power to publically shame you, it might be wise to just give the refund. This is a personal question every customer service agent or business owner will have to decide.