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How to ensure your refund experience creates happy and loyal customers

Ever wondered why companies so often have great products and create fairly good in-store experiences but when the customer wants to return items, it seems like the company stops caring about the buyer and their experience? We know all too well which part of the experience the customer is going to remember and tell his friends about…and its often the latter.

The Test

Our CX department recently visited a well-known sports brand to return items purchased at one of their local branches. Nothing really stood out about the purchasing experience, it was neither good nor bad. Where things got really bad, was during the return process. It was highly disappointing to say the least. It took more than 30 minutes to return goods that originally took about 10 minutes to purchase.

Once the refund was eventually approved, which seemed to be a long and drawn out process that required the supervisor of the store to override the purchase, our team was told that a refund can’t be actioned using the card that was initially used for the purchase. According to the supervisor, the system only allows a refund on a credit card or cash, but they didn’t have enough cash in the till to refund the purchase, which made the experience highly displeasing.

Peak-end Effect

Customers often remember their latest interaction with a brand, due to the cognitive memory bias, or the ‘Peak-end effect’. Customers have selective memories when it comes to experiences and don’t necessarily perceive the sum of their experience but rather how it was at its peak and how it ended.

The Solution

Due to the critical point in the journey, the staff should go above and beyond to ensure a smooth exit if they want customers to return. Staff should attempt to offer further assistance and seek feedback from customers on where they failed to deliver a quality service so that they can work to improve downfalls. They should remove all the barriers and make it hassle-free for customers to claim refunds. A customer shouldn’t have to struggle to get their money back.

The store might not have saved the relationship with the existing customer, but they could very well learn from their mistakes in order to sustain relationships with their remaining customers. We know it costs up to 6 times more to gain a new customer then to retain an existing customer, and that 80 percent of companies future profits will come from just 20 percent of their existing customers. The timing of the feedback is very important. If you ask for feedback before issuing a refund, your responses might be skewed.

Stores should ask themselves, how do they really want their customers to remember their experiences while keeping in mind the peak-end effect. They need to focus on earning their customers’ trust, so even if they weren’t satisfied with the existing product, they’re at least willing to give them another try at a later stage. This way they will stand a better chance of customers trying their products in future.

They should start by making their vision clear to the entire sales team, so that everyone is on the same page with regards to creating a memorable refund experience. Ensuring that all staff knows the importance of every touch-point is critical, especially with the refund touch-point because it might be the last interaction and have a tremendous effect on the customer’s future purchase behaviour. It’s very important that they communicate the “right message” about the brand at this point.

By improving refund processes, retail stores might experience the following benefits:

·     Reduced complaints – customers might consider returning to the store at a later stage and recommending products to their peers.

·     Over time the quality of feedback from customers will improve significantly.

·     Customers will start to repurchase after trying competitor’s products or services because the refund process and support convinced them to come back.

Keep in mind that refunds are not easy for anyone including customers. Try to make the parting experience a pleasant one because often that’s only what they will remember.


Michelle Badenhorst

Michelle is a CXPA-certified practitioner who helps organisations build profitable & sustainable customer-centric businesses by transforming the way they think about their customers and employees. She has established Customer Experience business units, Voice of the Customer and end-to-end Customer Journey frameworks for a range of organisations. Michelle is also the co-author of the best selling Customer Experience: 22 international CX professionals share their current strategies for achieving impact and visibility using best practice CX.