Why Refunding Generously Works
✍️ Ward Sandler
🗓 August 12, 2018
Why we’re generous with refunds
Offering refunds to customers can get a little tricky if you think about it.
When do they deserve one?
Sometimes it’s obvious - e.g. the customer told support to cancel their account, support forgot, and then the customer got billed again.
Sometimes it’s not so obvious - e.g. the customer has been totally inactive and not using your product/service for the last 30 days and would like to cancel their subscription and get a refund on the last payment.
Our approach at MemberSpace is pretty simple - we default to giving everyone a refund whenever they request it with very few exceptions.
Sure we could certainly squeeze a few more bucks out of people by throwing our terms of service in their face or blaming them for not cancelling before their billing date. But how does that help us in the long run? It’s not going to generate significantly more revenue. What it will do though is turn a situation that could have ended with a satisfied/happy former customer into a potential adversary.
When someone feels they deserve a refund, it doesn’t matter how the company feels about it. The customer feels the way they do and that’s that. Any outcome outside of giving them a refund leads to disappointment and potentially angry emotions on their end.
And in this day and age, what do people do when they are disappointed or angry... They complain about you on the internet!
You may be thinking that’s not the end of the world, but if someone has a significant following they could turn potentially thousands of people against your brand in an instant.
Is that worth keeping their $30 instead of refunding it?
Aside from avoiding internet complaints, being generous with refunds leaves the former customer with a good last experience with you. Meaning, if someone in their network has a need for what you offer perhaps they refer you or mention you have great customer support but the product just wasn’t a good fit for them at the time.
Maybe the former customer comes back since you’ve establish a relationship of generosity and trust.
So far, MemberSpace has avoided all the negative outcomes mentioned and enjoyed all the positive ones. As the saying goes, you catch more flies with honey than vinegar :)