I know the call all too well. A customer calls us and says “I thought I canceled my account months ago but I just discovered you guys are still charging my credit card.” After a long search, there’s no evidence of a canceled account, or even an attempt to cancel, or perhaps no response to our attempt at authenticating their request.
Upon telling the customer we don’t see any request to cancel, they then say, “Well I haven’t used the service in many months.” A quick look at their activity confirms they are correct.
Now comes the kicker. ”I want you to refund me for all of the service I didn’t use.” That request is enough to make any customer service representative squirm in their chair. Refusing to do so almost certainly results in an escalated call, but agreeing to their request certainly won’t make management (especially the financial folks) smile either. Raise your hand if you’ve chosen the low road and blamed the customer for not paying closer attention to their credit card statement. Guilty!
I have chosen each of the following tacts in response to this situation:
1. Refund Everything- This is popular with the customer but not with company policy. This is the pro-customer action, if you can still call someone that canceled their service a customer.
2. Partial Refund- Neither party is necessarily happy; just a little less angry. This isn’t really pro-customer or pro-company. It’s just sort of damage control or at best a compromise.
3. No Refund- Come to think of it, neither party is really happy here either. Yes the company gets to keep the money but the customer is really unhappy and unlikely to ever be a customer again–if they were previously on the fence.
4. Offer Store Credit- I have toyed around with the option of store credit. It doesn’t carry much weight when the customer says, “I will never sign up for service with you again.” What good is store credit in that case?
I come to you not so much as the expert but as one seeking to do what’s best for our customers while still being smart as a business. While refunding everything is the only strategy that is 100% pro-customer, is that the only option for a company striving to best awesome? Do we place any responsibility on the customer? What is your company policy on such refunds? If you are a customer service professional, how do you enjoy upholding that policy?
I think we should always be as pro-customer as we can be. I will always err on the side of assuming the customer is right and aiming to do right by them. The bigger shame is in losing a customer. Never forget that you need to answer the “Why did they cancel?” question over and over again and take action to improve based on it. If you are focused on squeezing the last bit of money out of a customer on their way out the door, you’ve already lost.
Refund the money – unless you like thinking of your former customers as miserable, festering boils, which is exactly what they will be, metaphorically, of course. Then ask your CFO to set up a budget account, Allowance for Customer Confusion, a contra account to Revenue. This is a Cost of Risk – that your opt-in/opt-out instructions weren’t as obvious to your customers as they need to be, or that a certain percentage of your customers will abandon using your service without making sure the charges stop hitting the credit card bill. This happens, and that’s OK, because your company has (or should have) already reaped the benefits from thousands of automatic monthly charges accruing to your revenue account – and Receivables didn’t have to generate a single invoice or wait for your cash to come in. Ka-ching!
So, my advice is – refund 100%, and be prepared that a percentage of your customers will get rip-roaring mad over being billed month after month for something they’ve completely forgotten that they were even paying for, set aside an allowance to refund their money so they won’t mug you in the night, and take solace that your company has already profited handsomely from this billing practice.
Then, invest time into making sure your service is so indispensible that it will be a rare day in heck the next time a customer calls to make the same request.