How to reduce refunds so money doesn’t come in the door and fly out the window

Posted on May 17, 2012 - 9:00 AM PST

This guide is based on Mixergy’s course with Marie Forleo.

Marie Forleo lost $64,000 in revenue after one-fifth of her clients asked for refunds, so she learned how to keep more customers, lowering the refund rate to 2.97% and increasing revenue three times over to $1.36 million. It was all done using customer service and marketing techniques, so we invited her to teach you how to do it.

Marie is the marketing strategist and business coach who created the Rich, Happy, & Hot B-School program, which trains women entrepreneurs to build unique and profitable brands while living out their ideal lifestyle.

Here are the actionable highlights from the course.

1. Identify your ideal clients to increase customer satisfaction

Marie outlined who her Adventure Mastermind program was and wasn’t intended for, which attracted more women who could perform well in it and resulted in fewer refunds.

Take Action:
Customize your pitches by indicating which specific type of customers will benefit the most from your product or services.


2. Make customers work for the refund to lower your refund rates

Marie’s refund policy requires clients to submit completed worksheets from the course, which reduced her refund rates and encouraged clients to really go through the B-School program.

Take Action:
Set up a refund policy that asks your customers for proof to show that they truly didn’t get any value from your product.


3. Say “no” when necessary to better serve your customers

When Marie’s customers requested a forum, she didn’t set one up but instead encouraged them to run their own community, which led to the formation of the “B-School Babes” Facebook group.

Take Action:
If your clients make requests that detract from your vision or are outside the scope of your product, suggest alternatives, compromise with them, or turn them down if necessary.


4. Write emails that mirror your clients’ emotions to connect with them

Marie wrote customized emails that reflected her clients’ moods at each stage of the course, such as an encouraging message after the second B-School module, which they appreciated.

Take Action:
Determine what your customers’ concerns are by calling them, doing surveys, and listening to feedback, and address these by offering advice, giving encouragement, or providing more information in your successive emails.


5. Use social proof and testimonials to build customer confidence

Marie routinely sends out customer feedback and success stories to the entire B-School community and features client testimonials on her website.

Take Action:
Set up a feedback survey that asks clients about their experiences, results, and what they liked and disliked about your product, then feature these testimonials on your website and in your emails.


6. Be brutally honest to show integrity and build customers’ trust

One B-School member cancelled after Marie shot her idea down, but later she thanked Marie for her honesty and said she hoped to join another of Marie’s programs in the future.

Take Action:
Deal with clients honestly and call them out on negative behavior that might harm themselves or other people.


7. Offer strategic bonuses to motivate clients to stay

As an incentive, Marie sends out B-School mugs, and offers exclusive content to customers who complete the entire B-School program.

Take Action:
Create bonuses in the form of content or souvenir items like mugs or shirts and send them to clients who stick it out past your refund period.


Want to make sure you get results?

Written by Hazel Chua, based on production notes by Jeremy Weisz

  • http://startuplift.com/ Pranaya

    Thanks for the tips. Marie, it was great exploring your site and you can count me in as a new subscriber. I like how you are addressing issues that small business owners face head on and simplifying them. For e.g. your post on “How Much Should I Charge? Here’s How To Figure It Out…” was very helpful.

  • Shelia

    Great course — Marie rocks and you did a great job getting info from her.  

  • Pingback: How To Reduce Refunds and Not Lose Your Butt! | Internet Marketing News, Reviews and Bonuses

  • http://www.blackysky.com/ Ricardo Solon

    “Set up a refund policy that asks your customers for proof to show that they truly didn’t get any value from your product.” is it even legal ….  I mean normally you can ask a refund without giving any reason… at least in canada ….

  • http://mixergy.com Andrew Warner

    Ever since we recorded this course, I’ve been noticing that other companies do that too.

    Click on the “see our no fail policy” link on this page. Then check out the list of what they expect of their customers: http://www.retrofitme.com/plansandpricing

  • http://www.blackysky.com/ Ricardo Solon

    I
    get it and I understand why a business wants to put this rules in
    place because it is going to select the good candidates. However
    those tips are not a full protection against refunds….. that
    doesn’t mean the tip is not valid or not good I was just expressing
    my point view…

  • Gemma Weirs

    In the UK (where I’m from), when a client or customer demands a refund, it doesn’t mean they are automatically legally entitled to one.

    I think Marie would stick to the commercial/trading laws in the country her business is registered in. So that means, as a savvy entrepreneur, she probably would have consulted a lawyer about this sort of thing.

  • http://www.profromgo.com/internet-marketing/pittsburgh-seo/ SEO in Pittsburgh

    Good list, but I’m not so sure about #2 – in my experience, customers have ALWAYS appreciated being able to get refunds quickly and easily.  Perhaps this does create potential for abuse, but if your product is honestly good – you’re still going to keep some customers.  Perhaps they won’t have liked that particular product, but they may  keep coming back when you promote new stuff.
    Making refunds easy also does a couple of other things. First, it makes people feel good about buying your product.  Is that going to lead to a higher refund rate? Maybe, but I think you’ll still make more in the long run, and that the sales that “stick” will still outweigh the refunds.  Also, people who have great / easy times getting refunds may spread good word of mouth about your business.

  • http://mixergy.com Andrew Warner

    I do refunds any time and for whatever reason, but ever since this course, I’ve heard people tell me that asking people to work a little increases satisfaction with the product.

  • Necati

    I was a Mixergy premium member. Today I submitted a question asking how I can cancel my subscription, trying to find a link where it says “cancel” or something. I got a response soon that my membership was cancelled :s
    Not what I asked for.

    I was actually thinking about watching a few more courses before my term for the month was over, but I wasn’t able to login after that. I think the proper thing would be to have my membership not carry over to the next term. This is kind of sucky in itself but I was more surprised about not getting a survey of some sort where you ask why I wanted to cancel. I would think you would’ve implemented such a device.

  • http://mixergy.com Andrew Warner

    That sucks.

    Sorry. I gave you another month. And I’ll ask Arie and Andrea to do what you suggested for every member.

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