Refunds and Warranty Claims for Internet Businesses

By:Nick Wood

It is all very well, just fantastic in fact, to have a steadily growing sales portfolio, achieved through your website. How are you travelling in the way you deal with returns? Are you achieving the balance between a robust and sustainable system, and a nightmare for your customers that will see them abandoning you in droves?

It really does not matter whether you sell products or sell services through your website. No matter what, you can bet that a certain percentage of your sales will turn into a refund or warranty claim. There is an almost endless variety of business models out there on the net these days. Everything from retailers offering physical goods, such as stereo players, to people in their region, to service providers selling their skill to people everywhere in the world. Every one of these businesses has customers, and therefore will have customers seeking to return what they bought.

So how does your business process claims for a refund, repair or replacement? Have a look now at your processes. Firstly backup a bit and see how clearly your site explains those processes to potential customers, in the pre sales phase. Some facts that I suggest you have freely available and easily found are.

1) Warranty and return terms for every item you sell
2) A FAQ section dealing with the process you need your customers to follow to initiate a claim
3) All the relevant time periods that apply in the claim process

I am suggesting that if you openly acknowledge that claims can arise in any sales process, and clearly explain how a customer can access the claims information, then two advantages will develop. Firstly, in that vital pre sales phase where potential customers are choosing their preferred supplier, they will take positive notice that you have been open enough to provide this information. If your competing suppliers do not supply this information, then this point alone my win people over. Secondly by having claims information easily reachable on your site, you will see a reduction in those time consuming enquiry emails from confused customers.

So now let us look how well your business actually processes a refund, repair or replacement claim. What you need to know at this point are a few facts.

1) Claims verus sales over a given period, (for example a quarter), expressed as a percentage
2) Timelines for those claims from lodgement to finalisation
3) Repeat customers who have lodges a claim previously

As every business type is different, so is the expected and acceptable claims percentage. You as the supplier will know from research what is a good percentage and what is far too high in your sector. Compare your results with the benchmarks, and you will have a great idea of how you are travelling. Similarly, by analysing the time lines, you can tell if your business drags its feet, and thereby annoys its customers. The third figure will perhaps take a bit more digging to uncover, but it is worth it. If customers who have lodged a claim with you have then subsequently purchased again, this is powerful anecdotal evidence that you have your claim process running well.

Have fun finetuning your business, and I wish you all the best.

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