Your worst customers make themselves known with one question…


“What’s your refund policy?”

The REALLY bad ones ask follow up questions from there.

“Can I cancel renewals as soon as I sign up?”

“What happens if I cancel on the 364th day? Do I get a prorated refund?”

“Do I get to keep (bonuses) when I cancel?”

Anecdotally we all know these people tend to come back to bite us in the ass (hopefully not literally, unless you’re into that!)

But just for fun, I’ve actually tracked it before. Put these people’s names on a list and checked their accounts a few months later.

The results?

Many never bought at all. Most who did (SURPRISE!) ended up cancelling within a month or two, and the ones who stayed asked a disproportionately large number of “stupid” questions and had significantly more interactions with customer service.

One even said he would make it “his mission” to destroy the company. Nothing happened.

In other words, they cost the business money, time, and individual hassle and grief.

In other words, you might be better off without them.

There is a plague on the information products industry, but it affects others also.

The freebie seeker. The newsletter junkie.

Always “buying” something new, taking what they can get for “free”, then cancelling and asking for their money back.

The worst among them just go straight to the credit cards and claim “fraud.”

Ouch.

But there are many weapons a business can use to defend against this scourge. (I go into detail about all of them here: https://gumroad.com/l/rkbth/VIP)

But one of the simplest tools in your arsenal is just plain old repellant. What repels a freebie seeking refund abuser more than anything?

Telling him clearly and up front that no matter what, he will NOT be getting a refund. Because you don’t offer them. All sales final.

Will this reduce sales? Absolutely. But if most of those sales are the low class customers described above, is that really so bad? You have to do that math.

The people who do buy mean it. And they’re likely to be some of the best people you’ll get.

And it doesn’t have to be as dramatic as it sounds here.

Monthly subscriptions are a great, easy way to test these ideas out.

No refunds, but cancel any time. Easy.

And here’s another thing…

No refunds doesn’t have to mean no refunds.

You can still refund anyone you want to. It’s your business.

Whether it’s the sad cancer story of the day, or someone who is such a pain in the ass you’d just rather have them gone, you can issue refunds whenever you want, at your discretion.

Do I recommend no refunds on all your products? Not necessarily. You’ll have to make that decision for yourself.

It works great for monthly subscriptions, but also for yearly programs where the customer gets everything up front. Combine it with some kind of cheap (not free) trial if you want to help people get over their fears.

As we saw yesterday, an unlimited refund policy can work great, at least in certain businesses. A no refunds policy is much the same way.

Taking things to the opposite extreme, but extremes are not always bad.

For everyone else, a basic, simple, SHORT refund policy is usually a good compromise. You will get some abuse (but less than Costco), but you’ll also get nervous people off the fence.

Then all you have to do is deliver a great product and (when necessary), world class service.

As I’ve said many times, the key to good service is prevention and keeping things simple. More on that here: https://gumroad.com/l/rkbth/VIP

— Mark

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