It seems to me that many - or perhaps most - online companies dread refunds. They fight refunds like they were the plague. They expend massive energies fighting refunds, and drawing up contracts and terms of service agreements that do not permit refunds.

For example, EV1 Severs. First they screwed up by blocking the very IP’s that they issued to us, which resulted in prolonged bind failure and of course rendered the server useless to us. And then they continued to charge my credit card months and months after we canceled the server. And both times they refused to issue a refund, solely on the basis of their No Refunds policy. In another case, they mistakenly removed and lost the server of a friend, who was operating a web hosting business, and again refused to issue a refund solely on the basis of their No Refunds policy.

It seems odd that Internet based companies are going in the opposite direction of large, successful offline brick and mortar companies. Ever try to get a return something and get a refund at Home Depot, Lowe’s, Target or even McDonald’s? For the most part, no questions asked and often they do not even need to see a receipt.

That kind of refund policy inspires trust. I can buy from any of those places with ease of mind, knowing that if something goes wrong, they’ll make right.

The Internet needs to learn from from the brick and mortar folks.

But John, you’ll say, we’ll lose money due to people fraudulently claiming defect after they’ve already made us of our products and/or services.

The bottom line is, you’ll always have the fraudulent few. But you’ll also have customers who were legitimately disappointed. We aren’t perfect. You aren’t perfect. If you disappoint, refund the money.

V7 Inc has refunded submission fees three years after the submission (client wasn’t happy with the category his site was placed in).

We’ve refunded $7,000+ in Contextual orders, and then paid (out of my own pocket) blog publishers to place the links and fulfill the orders.

In most of those cases, the clients did not ask for a refund. They simply expressed disappointment with the performance - namely, orders being fulfilled slower than expected due to under-staffing on our part. (We’ve addressed the issue and have 12 full time employees now - you can see several of them here.)

Sometimes it’s just the right thing, to refund the client’s money. If they aren’t happy, refund. We refunded one client’s payment of $1,000, placed the links out of our own pocket, and the client proceeded to order and pay for another $6,000 in links. See how that works? Prove to the client that you’re trustworthy and they’ll trust you.

Prove to a client that you will keep their money no matter what, and your brand will be worthless, as it should be.

The V7 brand is the most valuable asset we have. Customer faith and trust in us is what drives sales here, and we aren’t about to throw that trust away just to keep a thousand or two in the bank.

Just for the record, we do fight fraudulent charge backs.

This entry was posted on Thursday, April 26th, 2007 at 11:42 am and is filed under Branding, Internet Marketing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.