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BUSINESS BEST PRACTICES

No More Refunds For Subscription Customers

@Bruce McClellan, Chief Sand Castle Builder

“Please issue me a refund for the last 6 months.  I have not used your service and I forgot to cancel my subscription.  I know it’s my fault, but I want my money back.”  Any business that runs a subscription or recurring billing plan has had to deal with this type of email from customers or clients at some point.  Here is how to avoid this situation, keep your customers happy, and practically force them to continue subscribing to your service for a long time to come.

Many businesses enroll customers or clients into some sort of subscription based membership.  Could be for a membership site, or a monthly box of something, wine of the month club, online coaching, etc…   The customer subscribes and the money automatically comes out of their credit card or PayPal account every month until they cancel.

This is great because it keeps the income flowing,, and you don’t have to deal with sending out invoices every month.   Makes a no hassle deal for everyone involved.

That is until the client checks their account statement 12 months from now and realizes that they have been paying all this time but haven’t used the service for 6 months.  At that point many of them will just cancel and suck up the loss.  After all, they agreed to it and they forgot to cancel the subscription.

BUT, there will be a few clients that will send you a request to refund those last 6 months.  You, as the business owner, are then put into a tough spot.  Do you refund it, or do you tell them that they should have canceled it 6 months ago?

BE GENEROUS 

I had a subscription to Aweber, an autorepsonder / email service.  We didn’t use the subscription for almost 1 year and forgot to cancel it.  When they charged us for another year I contacted them to cancel the subscription and figured I would ask for a refund as well. I expected that they would politely say no to the refund.  To my surprise they immediately issued a refund and thanked us for doing business with them. I love their product, and this just reinforced my good feelings about the company, making it much more likely that I will go back to them for other projects in the future.

What if you could dramatically cut down on the whole refund or not issue, while at the same time increasing the amount of time that someone actually wants to stay subscribed?

PROVIDE NOTICE

As I checked my email today I received a notice from another subscription service that I was using notifying me that “An invoice has been generated and your credit card will automatically be billed in 12 days unless you cancel.:”   I immediately went and cancelled the subscription thus avoiding the whole refund predicament.

Sure they lost another month or two of sales, but they avoided having a disgruntled customer who feels like they got ripped off.  They also eliminated the labor, time, and hassle of dealing with the refund and cancellation request.

BLOW THEM AWAY

One of my clients was a personal training group that provided online coaching. For $120 per month the coach would provide a meal plan & workout plan. Every week the client would send a ‘check in’ to the coach and the coach would re-evaluate and tweak their meals & workouts.

There were a few online coaches who regularly had clients cancelling. They didn’t have enough money right now, they were having medical issues, they were going away on vacation.  They always had a reason for stopping their subscription. Opposite of that were a couple of online coaches who’s clients NEVER cancelled.  They stuck with their coach for years at a time.  I saw first hand that these coaches weren’t just communicating once per week on check-in day,  If a client emailed them a question or concern during the week they would respond with a VERY DETAILED answer within minutes.  They didn’t use the cookie cutter pre-made templates that some coaches used, they customized everything for every client.  More work? Yes. Worth the extra effort? Absolutely.

Some businesses bank on the fact that people will forget about their subscriptions and just let the money keep on flowing for months and possibly years.   That is certainly one of the reasons for starting a subscription/membership service.  Those businesses would say, “I’m not going to remind my subscribers about their subscription.  I don’t want them to cancel.”

So, to sum it all up…

  • Come up with a service or product that you could offer on a subscription bases.  Get customers to sign up on a recurring billing plan so that they are automatically paying every month.
  • Send your subscribers a reminder before their billing date. This way they can take action to cancel if they really want to.
  • To make them want to continue for a long time provide a superior product or service on an ongoing basis.  Blow your subscribers away with WAY more than what they expected.  Develop your product or service into something that they want to use every month for a long time.
  • Don’t just let it be something that they have to remember to sign into every month.  Send them information and new content throughout the month, every month.  Keep them involved.  If they feel like they are getting something out of the service they will stay MUCH longer.

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OCEAN STRAND DIGITAL
9321 Steeple Ct.
Laurel MD 20723
bruce@OceanStrand.com
(240) 547-9457