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How Companies Can Avoid Refunds and Claims

Avoid claims

In today’s “claims culture,” small businesses and online retailers are constantly having to battle with the role refunds and this becomes a rather hefty cost to the business. 

In fact, data from eCommerce powerhouse Shopify shows that up to 15% of all orders are refunded, with customers saying that they no longer wanted the item, received the wrong item or it was damaged in transport. 

When it comes to financial products, airline travel and housing, no matter how hard we try to provide a good service and experience to customers and follow the regulation, there are always a number of customers who are not going to be happy with your product or will be looking to get some kind of refund. We provide some top tips to overcome losses from refunds and claims.

Be Transparent About What You Are Offering

One of the main reasons that people ask for refunds is because the product is not what they expected. If you are selling something physical, such as clothes, electronics or equipment, any additional photos will be useful to show the customer pre-sale. The individual can then have an idea of how it looks when being held by a person or in connection to its environment – so you will avoid any complaints that it is too small or too big. 

Any other information or photo evidence that you can show such as its colour, measurements, assembly and maybe some reviews to back it up, will help to manage the expectations of the customer and make sure that they are definitely getting what they asked for.


Offer a Discount or Incentive

Losing customers to a refund is a big financial loss, because you are required by law to offer a full refund if they are unhappy or if the product is damaged or not correct. In fact, refunds are a complete loss to the company, because there are costs involved with the time it takes your staff to package and send the goods and then you may have to wrap it again if it is returned to you.

Rather than lose the sale completely, the goods are already in the hands of the customer, so can you do anything to keep it in their hands and keep the money you make from the sale? You may want to give some money back to the customer on the spot, such as saying: “We are sorry for this, would you be happy for us to take £20 off the bill?” 

Other options include offering discounts if they wish to purchase another, but anything that can keep the sale going through will be a good way to maintain cash in the business.


Follow The Regulation

“When it comes to claims, you really want to follow the regulation by the book,” explains Gavin Cooper, the founder of Claims Bible.

“Whilst as a company you believe that you are doing the right thing, there have been too many cases where companies were exposed for doing the wrong thing and have subsequently had to pay huge claims such as diesel emissions, plevin claims or the famous, PPI.”

“As a company offering a financial product or any service, it is always important to take extra steps to be in the best interests of the customers and check your processes with the regulator to make sure that you are doing the right thing. From carrying out sufficient checks on customers, to showing them the terms and conditions and not charging big broker fees, it could be less profitable short term but you could avoid a big claim down the road.”


Make The Refunds Process Easier

If you have to make refunds when people are buying cosmetics, clothes or electronics through your website, try to make the process as easy as possible. 

Some retailers offer return bags in their deliveries, so it can quickly be returned in the safest and cleanest way possible. 

Other websites have clear refund policies and you can print off a code that can be added to your refund and you can simply return it from your local post office free of charge. If you can do this in a cost-effective and seamless way, you will avoid any potential losses whilst still keeping the customer happy for future purchases. 



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