How to Prevent and Manage Membership RefundsĀ
This article was originally published on Restrict Content Pro.Ā
Membership refunds might be the last thing on your mind. After all, you are building your membership site to maintain customers, not to lose them. But membership refund requests do happen, and itās important to know how to manage them.Ā
Letās explore why members request refunds and how to prevent those requests. Then, look at tips for handling refunds on your membership site.
Understanding membership refunds
There are many different reasons why your customers might request a membership refund after theyāve already become paying members, including:
- They forgot to cancel their membership prior to renewal.
- They accidentally allowed their membership to lapse.
- There was confusion about your membership site, and the member decided the membership didnāt fit their needs.
- They cannot afford it any longer.
- They are too busy or cannot take full advantage of the membership.
Whatever the case may be, avoid the trap of taking membership refund requests personally. In fact, the best thing you can do when you get a refund request is learn why it happened. Then, if there are ways the situation could be avoided in the future with other members, apply what youāve learned as you move forward (more on this later).
How to prevent membership refunds
Now, letās discuss some of the best ways to prevent refund requests before they happen. While they canāt be avoided entirely, there are certainly some tangible things you can start doing today that will minimize them.
Here are five ways you can prevent refund requests on your membership site.
1. Offer members a free membership tier or free trial membership
If site users are required to plug in their credit card number (and you immediately charge a yearly membership fee) before they get a peek behind your paywall, youāre inviting a lot of refund requests.
To solve this problem, allow site users to try out a membership with you before committing to a yearly membership fee. Consider offering a free seven-day trial that gives full access to all of your members-only content.
Or, offer a free (and limited) membership tier where site users can join and review some of your premium content prior to becoming paid members.
2. Keep in close contact with members
Active and engaged members are the ones that will remain with you the longest. And rarely will a loyal member of your site request a membership refund.
To help your members feel like they are a part of what youāre doing, send them regular newsletters regarding updates to your site. Also, let them know when you publish new and exclusive content.
Anything you can do that makes your members feel like they are a key part of your community will keep them engaged and far away from requesting a refund.
3. Send out reminders when itās time to renew
Cut back on refunds that come from lapsed renewals by reminding your members about any automatic payments well in advance of the actual payment date. Make sure users are aware of recurring membership payments before they happen.
Additionally, itās important to always be accurate and transparent in your marketing, sales pages, and web copy. Bringing in more membership sales by omitting information (or over-selling with inflated promises) will lead to more refunds in the end.
The more transparent you are with your members, the fewer refund requests youāll deal with.
4. Have clear terms and conditions
Always remember that properly managing customer expectations is one of the best ways to avoid refunds. How clear are you with your site users when it comes to the details of your membership program?
To manage the expectations of your customers, you must be as clear as possible about exactly what a membership will look like before they buy. Look through your website with a fresh eye to determine how effectively youāve explained the details of membership.
You shouldnāt stuff your terms and conditions with confusing legalese. Rather, you want to use clear, concise, and deliberate language thatās casual and friendly enough that anyone can understand it. This approach to your terms and conditions is much more inviting than copying and pasting outdated legal language that you and your members donāt understand.
5. Set up money-back guarantees
A money-back guarantee is one of the most effective ways to create customer confidence. First, it removes the financial risk involved in the customerās purchase. But beyond that, it shows your customers that youāre confident in the quality of your product ā and youāre confident they will be satisfied with a membership to your site.
To set up an effective money-back guarantee, youāll first want to decide on a specific time period during which your customers can request (and receive) their money back from a membership purchase. During this predetermined period of time, make it clear to your customers that they can receive a refund of their membership fees with no questions asked.
A good example of an effective money-back guarantee is one that applies to new members any time within the first 30 days after initial sign-up.
Tips for handling membership refunds
Know when to issue refunds
If you want to land in the category of successful membership websites, youāll learn that itās best to focus on the positive aspects of running your business. Rather than battle against refund requests, keep your focus on creating great content and keeping your loyal members happy.
Often, a negative interaction with a member (no matter how justified you think it may be) will cause a lot of problems in the long run. Perhaps you are correct in defending a decision to refuse a customer refund. But is it worth the damage that may ensue from a highly dissatisfied customer who blasts negative reviews about you all over Google and social media?
Of course, there are exceptions to every rule. There will be times when denying a customer refund is completely justified and you should stand your ground.
Some examples of when you should consider refusing membership refund requests include:
- A customer signs up for your membership site, downloads all of your premium content in the first 24 hours, and then immediately emails you asking for a refund.
- A customer signs up and then is completely inactive for the first few months of membership. After several months have passed, they decide they should be refunded for the entire length of the membership they chose not to use.
- A customer becomes a member of your site and then shares their exclusive login details with friends or family members. You can easily prove this because their login records show active sessions in multiple states or countries at the same time.
Conversely, here are some common scenarios when you will probably want to issue a refund:
- Your customer requests a refund within the refund or money-back guarantee timeframe.
- The customer reached out to you for assistance, but you werenāt able to resolve their issue prior to them requesting a refund.
- A customer signed up for your membership program, didnāt download or access any content for an entire month, and then requested a refund when they finally had time to review your material for the first time.
- Your customer simply isnāt happy with the membership for any valid reason.
For those times when you do decide to issue a customer refund, itās a good idea to allow customers to use their membership until their next renewal date arrives. Offer them this opportunity, even if they request a hard cancellation.
Keep your membership refund policy as simple as possible
If youāve decided that you will offer refunds in certain situations, itās important to keep your policy as simple as possible. Even though receiving a refund request isnāt enjoyable, you donāt want to make the process so difficult that customers arenāt able to complete it.
Keeping your membership refund policy as simple as possible is key.
For example, you want to make it easy for members to find the refund request form or website page. Of course, you donāt want to openly market your refund policy at the center of your site (thereās no need to encourage refunds). But donāt hide it away or make it impossible to find, either.
Learn something from every refund request
A few refund requests each month is normal for an active membership site. But if youāre getting an unusual number of them, it might be time to take a look at the quality of your new content or your site layout. What can you improve? Is there a common traffic source thatās producing members who cancel? Is there something thatās not working?
Refund requests can teach you a lot. Sure, there will be scenarios where the customer is hasty, or even irresponsible. But, youāll likely find that most requests are coming from brand new members who, for some reason, arenāt quite satisfied with your membership.
Itās important to figure out why.
Focus on the long game
In nearly every business scenario, a short-term loss is worth the long-term gain of building a brand that is known for exceptional customer service and positive experiences.
And often, members who cancel their memberships return later to continue on their journey with you. But even if they donāt, theyāll appreciate a helpful refund experience that is enough to retain a positive view of your company (potentially even supporting future products or projects).
It can be tempting to dispute every refund request or try to talk members out of canceling. In fact, it can feel pretty upsetting when a member reaches out and demands a refund.
But remember, memberships thrive on long-term member retention. As long as your member numbers arenāt dropping sharply or consistently, a few refunds here and there wonāt stop you from achieving success with your membership site.
MemberDash Makes It Easy
Membership refunds donāt have to be complicated. Focus on simplicity and transparency to prevent refund requests. When you do receive those requests, handle them by knowing when to issue the refund and focusing on the long game.Ā
Of course, success also depends on the tools you use for running your membership site. For WordPress site owners, MemberDash is a great tool to create and manage membership sites. Itās a powerful yet flexible plugin that turns your site into a fully functioning membership site with no coding required. Try it out for free in the demo today.
LearnDash Collaborator
@LearnDashLMS