How To Deny a Refund and Keep Your Customer

Listen to the audio version. 👆

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We've all seen refund requests that can range from the "they're toeing the line" to the "they must have lost their damned minds."

Your mind teeters back and forth between indignant and scared of saying no because of what the customer might do.

It may seem like denying a refund request automatically means losing a customer or getting a bad review, but it doesn't have to.

You can dodge the bad review and keep the customer if you approach the situation right.

WHY IT MATTERS:

You won't always be able to give your customers everything they ask for. Learning to manage those situations means you keep more customers and save money from needing to replace them.

It's so tempting to just send this, isn't it? 😆

Why Customers Ask For a Refund

Refund requests are most often due to unmet expectations.

If we're denying a refund request, that means that, at a minimum -

1. We've set reasonable expectations.

2. We've made those expectations easy to access and understand.

3. We've done a good job within the expectations that were set.

If you've done those things, then you're within your rights to deny a refund request.

Note: There are many reasons why a customer may ask for a refund. For the sake of this article, we're tackling how to respond to more straightforward denials. A lot of times, you have to dive into your coaching bag of tricks to see what's really going on.

Deny a Refund and Keep Your Customer

When dealing with emotionally charged situations like refund requests, a framework to help keep you focused can help.

That's where the RCIS(R) Framework comes into play.

R: Relationship

Start your response with something that builds the relationship. This often includes but is not limited to:

1. Use their name.

2. Thanking them for reaching out with their concerns/situation.

3. Convey empathy for their situation (unless it's just straight-up kooky-dooks.)
   

👈 Example

Here's what this might look like - "Hey, (customer name),

Thanks for letting me know you're feeling frustrated and would like a refund. That's never a feeling I want my customers to experience."

C: Confirm Understanding

To make sure you're 100% clear on the situation, restate what you understand their situation to be.

Often, when people are frustrated and reach out, they aren't the best at communicating. This part of the framework ensures everyone is reading from the same page.

Sometimes, you get lucky, and a customer reads back their situation and goes, "Huh, maybe that's not reasonable."

1. This shows that you're paying attention and understand what's happening.

2. If needed, ask clarifying questions.
   

👈 Example

Here's what this might look like -

"Let me make sure I understand your situation clearly:

(Reiterate what you understand the situation to be.)"

I: Inform

In this part, you'll inform them of your decision and why.

It is crucial that you communicate very clearly in this section. It's very tempting to overshare or overexplain, but try to keep it concise.

1. Share your decision and why.

2. If you have a related company policy to point back to as to why they're being denied a refund, quote the relevant section.

   1. Bonus: Include a link or attachment of where they were informed of that policy.

👈 Example

Here's what that might look like -

"I am not able to give you a refund due to the project being underway.

The refund policy in your contract is: (quote refund policy).

I've attached a copy of your signed contract for you to review. It's on page (page number).

S: Solution

Now, this is where you can turn a potentially bad experience into a good one.

Remember that just because you can't give them what they're asking for, it doesn't mean you can't find a workable solution.

1. Show empathy.

2. If there's room for them to get a refund if they take certain steps, let them know.

3. Offer a solution to their situation if there is one. If there's a deadline attached to the solution, include that.

👈 Example

Here's what this might look like -

"I'm sorry that's not the answer you were hoping for.

While I can't offer you a refund, I do want to help.

Here's what I can do: (Offer a solution)."

R: Relationship (Again)

By ending on a relationship-building section, we can try to suck the heat out of their frustration. Let's try to end with something positive and give the customer comfort.

This may not be possible when a customer is being totally outlandish, but I'd argue that's pretty rare.

Below are a few things you can do to end on a positive relationship note. Be thoughtful not to be too flowery, as that can come across as blowing smoke up their ass.

1. Share appreciation for their openness and communication with you.

2. Show confidence that you both can work together to get the situation sorted.

3. Reiterate that you're in their corner.

👈 Example

Here's what that might look like -

"Thanks again for taking the time to share your situation with me. While we won't always agree on a solution, please know that I will always do my best to take care of you.

Let me know what you think about (solution) by (date) so we can discuss the next steps for that."

⚠️Reminder! It's not you vs the customer. It's you and your customer against a problem that you both need to work together to solve. Watch for language and tones that may come across as combative or aggressive.

When There's No Solution

Sometimes, there is no solution that you can see or no solution at all.

Often, I see that service providers aren't thinking outside the box enough or are feeling too ego-bruised to offer something because "It's the principle of the matter!" 😤

Double-check to make sure there isn't an interesting solution hiding behind your ego before concluding that there's no solution.

If that's not the case, then here are two options for next steps:

Option 1: Open the floor to your customer for solutions that aren't refund-related.

Option 2: Skip the solution part of the framework.

Temper Your Expectations

You can't expect a customer to leap for joy at your solution (or lack thereof).

Remember that you're playing the long game. While your customers may not be thrilled at the moment, they will be less upset than if you'd just said, "Tough nuts. No refund for you!"

The goal is to save what you can. Sometimes, you'll get a customer who totally gets it and is happy to go along with your solution. Cherish those times.

Most of the time, you're just trying to minimize the negative feelings your customer is experiencing.

What matters here is that you have listened to your customers, shown empathy, and attempted a solution. That can often be enough to keep a customer, even if they wish you had given the refund.

Believe it or not, most customers are reasonable when treated with respect.

Emphasis on most.

THE TAKEAWAY:

It's easy to let a refund request rattle you and destroy a customer relationship. If you approach the situation thoughtfully, you can deny a refund and keep your customer.