Preventing Chargebacks
Chargebacks are the bane of merchant's existence. Not only do they cause obvious financial losses, they also trigger logical and administrative headaches for merchants. Fortunately, they are often preventable by providing good Customer Service. A simple search for "chargeback" on twitter show a long list of unsatisfied customers ranting about the lackluster customer service they received. For example:
@xxxxxYour customer service is a joke! Some "do" company.. Will be issuing a chargeback on my cc for this horrible service. Mac herewecomeor
@xxxxx How do I get a hold of someone in support management? Will be doing a chargeback against you due to support issues.
These are but a few examples of customers looking for customer service, only to have the merchants fail their (realistic or not) expectations. Regardless how they show their dissatisfactions, ultimately the most inexpensive way for merchants to resolve these issues before they escalate into chargebacks.
Here are 5 suggestions we have from our personal and professional experiences.
1. Tell them who you are
One of the most prevalent reasons that customers initiate a chargeback is that, without mal intent, they simply do not know who you are, as you appear on their credit card statement. So contact your credit card processor to make sure your name appear as the customer would know you on the statement. If you use a "doing business as" (d/b/a) name, then make sure that's what appears on the customers' statements. 37 Signal was able to reduce 30% of their chargebacks by changing just what appears on the statement and adding a phone number for the customer to contact them.
2. Have enough people for support
No one likes to wait, wither it's a physical line or an invisible queue on the phone. Staff your customer support appropriately based on your needs. Phones should be manned, emails returned promptly.
3. Give refunds
By the time a customer calls you up to ask for a refund, whether it's your mistake or his, he is looking to get out of the situation. It's an opportunity for you to pacify the customer and potentially win over a critique by wowing him with your customer service. Think of the alternative, if you don't offer a refund, the next phone call the customer makes might be to initiate a chargeback. Even if you fight the chargeback and win the representment, you often will spend much more time and money, which could be easily avoidable in the first place.
4. No bait and switch
Advertisements can be misleading. When the customer feels that he is not getting what he paid for, he is going to complain. Sometimes they complain to you, sometimes they skip you and go directly to their credit card companies. Be as open as possible to criticisms from customers and steer your business practices accordingly.
5. Keep the customer informed
Whether you offer physical products or digital goods, make sure you continue to engage your customer and provide transparency. Let them know when their orders have been processed or have left your fulfillment center and en route to them.
