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In this episode of The Struggling Entrepreneur, we have another case study, with some of the warning signs that can result in lost sales and lost customers due to some behaviors by small business owners who sell information products.
If you have an internet business with online purchases, you probably may have invested in some type of electronic infrastructure:
- perhaps a membership site;
- perhaps an eCommerce application to accept payments, etc.
- perhaps an email list application for email marketing and processing;
- perhaps you may be sellling courses for training or skills development;
- perhaps you may be selling information products that provide value to your customers; or
- perhaps you may be selling ebooks, CDs, DVDs, videos or audio files to your customers as primary or complimentary materials;
- etc., etc.
There is an exposure for negative impact that can occur if the Entrepreneur includes the image seal of “100% Money Back Guarantee” on a sales page as if it were harmless boilerplate. But the Entrepreneur should beware in showing any type of anger when a customer requests a refund for valid reasons (such as being a “bad fit” or not delivering the value that was promised).
This episode is a case-in-point about this situation that can backfire for an Entrepreneur.
In today’s competitive environment, an Entrepreneur may be so identified personally with the products or offerings of the firm that this individual may not realize that this “100% Money Back Guarantee” is really a benefit and a promise to the customer. That is, this is one more reason that the customer should feel comfortable doing business with the Entrepreneur in taking action and purchasing the product or offering. And in keeping this promise when the refund request arises, the Entrepreneur demonstrates his promise.
Without this Guarantee, the customer may have doubts about the professionalism of the Entrepreneur, and sales may be lost.
As you will hear in this audio episode, this case study is about an Entrepreneur who seemed to take a refund as a personal attack and showed apparent anger in responding to the customer.
The results from such behavior can be significant:
- the customer can perceive that the Entrepreneur was not really serious about the Guarantee offered; this could create a perception of “duplicitous behavior” on the part of the Entrepreneur;
- the customer may feel insulted that the Entrepreneur appeared to take this refund request personally, as if it were an attack on the Entrepreneur individual;
- the customer may get a perception of a lack of integrity on the part of the Entrepreneur — since the Refund was one of the benefits and promises offered by the Entrepreneur on the sales page or squeeze page;
- the customer may perceive that the product or offering was “oversold” with too much hype, and that the promises were unreal. Thus, the customer may become skeptical and never believe anything more from the Entrepreneur when another product or offering is promoted.
- the customer may then give negative feedback or negative comments about the Entrepreneur and/or the products or offerings to others who may be asking recommendations from the customer and may be potentially good prospects or customers within the niche or environment and ready to purchase the offerings or products;
- the customer might use social media to spread the word — but instead of a “referral,” the results may be negative opinion. And, as you know, for each dissatisfied customer, there is a probability that 15 other potential customers will be told about the Entrepreneur and this behavior.
The latter would be a great loss of potential customers for the Entrepreneur, let alone the feedback and loss of goodwill.
This case study gives the facts and analysis of a situation where the Entrepreneur may not even realize that the behavior appears to be emotional and that the small business owner takes a refund request as a personal attack from the customer asking for the refund.
It is obvious that fulfilling refund requests demonstrates integrity and trust — for the customer who gets the refund may refer others to the Entrepreneur (especially if the others do have a good fit for the product or offering). This can result in a win-win-win situation, where positive outcomes occur from behavior more than either serendipity or marketing hype.
However, in this case study, the outcome was “lose-lose” due to the behavior of the Entrepreneur, who appeared to take the refunds as a personal attack. As we all know, there is no room for this type of behavior in an online world of business.
Now, what can YOU do, as an Entrepreneur, to perceive refund requests as a business benefit to the customer (like any other marketing benefit or tactic)?
How can you prepare for this and plan the refund requests in the business?
The answer is simple — treat it like a business transaction that your customer may execute. In Basic Accounting, you learned that “returns” are subtracted from the gross sales. So it is with refunds. Yes, you may have to deduct fees that you pay for refunds from certain financial facilities (like PayPal).
But planning for refund requests is no different than planning for returns-on-sales (if you were selling a hardware “widget”). That is, you should plan for a percentage or an amount of such “returns” aka “refunds” from the sales of your product or offering. And you can get that information from the financial forecasts of your environment or niche or industry (i.e., what is a standard percentage of “returns” — or in this case, “refund requests”?).
By planning for refund requests and incorporating them into your marketing or sales plans and forecasts, you can be professional, act with integrity and gain trust by treating these possible transactions as a BUSINESS.
And, mainly, it will prevent you from looking at these refund requests that you offer to your customer as a rejection upon yourself or your product (if you are too closely identified with your offering). And thus, it will avoid you from taking a refund request personally and acting somewhat childish with pouting or anger — and most of all, it can prevent a lose-lose situation in which you may encounter reprisals, lost sales, lost customers, lost goodwill and negative feedback on the social media networks.
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