How to Reduce Refunds and Payment Disputes when Selling your Online Course10 minute read
It’s natural to have customers that are skeptical. Dealing with payment disputes when selling online courses (or selling anything online) is a part of doing business, regardless of how carefully you try to avoid it. There are, however, a few things that you can do as a business owner to significantly lower your refund rate. For those few chargebacks that and refunds that will inevitably happen no matter what, it is possible to create a clear framework for handling them. Here we will cover best practices so that you can get back to building your business and not let payment disputes slow you down.
Reducing your Refund Rate
Make sure you handle at least some customer support yourself (ideally all of it when you first start selling your online course). No matter what the business is, you should start by doing support yourself instead of outsourcing it. The reason for this is because when you truly care about the long term success of your business, you need to stay on the pulse of understanding customer sentiment. Are your customers confused by something over and over on your registration page? Are your customers constantly asking questions that your target audience shouldn’t be asking? These are the types of questions that you will quickly find answers for by handling support yourself.
Before we go to deep in how to reduce your refund rate, let’s cover how to respond when you are asked for a refund:
- If the customer is asking for a refund in a way that is clearly within your refund policy, or you have a no questions asked refund policy, you can kindly let them know that they are being refunded, and let them know how long the refund will typically take to show up in their account.
- If the customer is asking for a refund that is in a grey area that is slightly outside what your refund policy would allow, then in most cases, it is still best to respond in the same way as the first situation and provide a refund.
If your customer isn’t happy and wants a refund and if he genuinely isn’t trying to scam you, you shouldn’t want their money. In most situations it simply won’t be worth your time to deal with the hassle of trying to avoid the refund and deal with potential chargeback disputes. What you can do in the future is instead try to prevent these types of customers from purchasing your product in the first place. This can be done by targeting marketing to the right people and by politely telling potential customers who reach out that they aren’t the right fit for your program, when it is clear that is the case. Below we will describe these ideas in detail.
Understanding the Mindset of your Customers
How people feel about your product before they purchase it can help predict how they will feel about it after they receive it.
There are times when you can tell that a customer is going to ask for a refund before they purchase your product. If you or someone on your team interacts with a potential customer like this, it might be best to let them know that your course isn’t right for them at this time. If one of these types of customers slips through, purchases and asks for a refund later, don’t think of the situation as you losing money, but rather, as a mistake that the customer purchased your course in which case you should happily refund them.
These are some warning sign phrases you might hear from potential customers:
- “I have purchased so many courses in the past and I always have problems and end up having to ask for a refund.”
- “No one gives me the result they say they are going to give me.”
- “I am just really worried that I’m not going to like the program and that it might not work.”
Look at the above as opposed to a student saying, “I’m so excited and determined to put 110% into making sure I make this happen for myself”. In the examples above the customer is expecting that miracles will happen to them, rather than believing they have any effect on the outcome of what they purchase. People who are of the mindset that the world is happening to them rather than they are happening to the world, will have a constant stream of problems with many of the situations they are involved in.
Remember that most people are genuine and won’t take advantage of a refund policy you’ve put in place (even if it is a generous one). There will be very few that try to use your refund policy to get your course for free.
Ensure Customers Understand What they are Purchasing
Ensure that your marketing is clear, and answers all the questions that a prospective purchaser of your course would have. Customers buy things that make them feel better, but only when they understand them. When you first launch your course, you should pay ruthlessly close attention to all of the questions that you are asked from potential students. Collect these, and make sure to better answer them ahead of time on your landing page, in your emails, and on your webinars.
Be specific on what your program includes and what it is. If you are including some kind of download files, explain that. Mention how many lessons are included in the program, how payments and refunds work, and if the program will be continuously updated or not. Explain the expected length of the program and minimum expected time commitment from your students. Potential customers won’t buy your course if they don’t understand these things clearly.
You’ll also want to ensure that the statement descriptor is clear and will be recognized by your customer so they don’t mistakenly make a chargeback, because they don’t know what the transaction is. Heights Platform makes this easy for you as a mentor by helping you set a statement descriptor to match your program name when you connect your Stripe account.
Attract the Right Audience
Having many payment disputes can also be a result of poor audience targeting.
Your marketing materials can communicate to your customers in a way that builds confidence, trust and excitement. Rather than writing your copy simply to communicate the result your product provides, write it in a way that also appeals directly to your target customer. Let’s say the course you are selling helps designers learn the development skills necessary to build their first app. You wouldn’t want to attract non-designers for this specific training, so make sure your marketing copy specifically speaks to the designer. “Designers, learn how to bring your design work to life in your own app” would be a better thing to say than simply “Learn how to build an app”.
The course you are selling is designed to help those who are stuck at a certain level, reach the next level when they put in the effort required. There are some people though, who don’t yet have nearly the same level of experience as is necessary for students to benefit from your program. For these types of potential students as well as those who have deep issues with their mindset, it could be best that they aren’t accepted to your course. You might think, “Doesn’t my course have the responsibility to provide a result for everyone? Don’t I have that responsibility?”. The truth is, your course is likely designed for a certain group of people who have a certain level of specific experience. Providing a positive result for those who are outside that group will be difficult.
If you look at it from the perspective of what your responsibility is, and if you really want to make the biggest impact on the world, then the little time you have would be best focused on you helping winners win more, rather than spending so much effort to struggle with a single person who can’t be easily taught.
People who have the mindset that nothing works for them and who plan on buying your course just to refund it shortly after, often can’t be helped. As a course creator, you shouldn’t worry about these types of people asking for refunds, though you could likely optimize the way you target your marketing and price your course to reduce the amount refunds from students like this because you aren’t attracting them. Whether it is directly or indirectly, you are choosing your customers, so choose the ones who can best benefit from your offering.
“Who you choose to be around you let's you know who you are” ― The Fast and Furious Tokyo Drift
How to Respond to a Fraudulent Chargeback Dispute
Even if you have perfected your process in dealing with refunds, there will still be a few situations where chargebacks happen. Unfortunately some may be fraudulent, or a result of a customer simply forgetting they purchased something from the business they see on their statement. Then there are situations where a customer goes right to their bank instead of first contacting your support, and files a chargeback against you. The first time a chargeback happens to you as a business owner can be scary and stressful. Sometimes customers don’t even realize that what they are doing is telling their bank you’ve taken their money when you shouldn’t have, and they instead think that they are simply asking for a refund from their bank rather than the service provider (you and I know this isn’t how it works). Below are the following things you might want to include when providing evidence against a chargeback dispute:
- Transaction ID
- Your refund policy
- A rebuttal regarding the claims of the customer
- Proof of delivery and use of service (customer account in your system, emails to customer, IP address of account, email address, and last sign on date)
- Date of transaction
- Any other documentation you have showing that business was as agreed to between you and your customer (emails, agreement forms, signatures, evidence of previous transactions with customer)
- Documentation that the customer never tried asking for a refund (for situations where you would have provided a refund, but the customer went to their bank first instead of contacting your support)
It is best to have all of this ready and sent to the chargeback processor at once even if it isn’t directly asked for. Having to go back and provide additional details only slows down the process, taking you away from your business for more time.
If your business in particular has trouble with fraudulent transactions, you might want to look into using Stripe Radar with your Heights Platform account, for extra fraud protection beyond Stripe’s default risk analysis: https://stripe.com/us/radar
Finally, remember refunds and fraudulent disputes are a part of doing business. If you’ve worked hard to attract the correct audience, then the amount of payment problems you run into will be a very small percentage of your business, and since there will always be some bad actors, it is best to not waste too much time worrying if you can protect yourself from all of them. That time is most likely better spent growing your business and getting more real students into your online course. If you aren’t happy with the amount of refunds you are receiving, remember the above is all about communication — make sure your customers understand your product/service and make sure you understand your customers.Create Your Online Course Today