Transaction disputes are a complex issue with hundreds of potential triggers. However, all chargebacks ultimately can be traced to one of three sources: criminal fraud, merchant error, or friendly fraud.
Most preventable chargebacks are the result of merchant error. Up to 40% of all transaction disputes are caused by simple oversights or easily corrected mistakes. Additionally, poor customer service is one of those merchant errors that leads to unnecessary chargebacks.
The Reality of Customer Service and Chargebacks
Research conducted by Chargebacks911 reveals that less than half of consumers contact the merchant before filing a chargeback. Despite the responsibility they’ve agreed to in conjunction with card ownership, consumers are not upholding their side of the bargain.
The desire for convenience is the primary motivator in this instance. Surveys have found more than 80% of cardholders who had engaged in friendly fraud did so out of convenience, thinking it was easier to contact the bank than the merchant, and didn’t believe it was wrong to do so.
These findings yield a fairy obvious conclusion: if you want customers to contact you for a refund instead of initiating a chargeback, the experience must be perceived as quick, easy, and painless. Merchants must ensure the highest quality engagements possible with those consumers who do reach out to resolve the issue directly with the merchant.
Here’s what you need to know about creating a convenient and effective process:
1. Phone Calls are Outdated
According to Conversocial’s State of Social Customer Service Report, 32% of survey respondents felt phone conversations were the most frustrating way to engage with a business’ customer service department.
Just like omni-channel shopping where consumers can make purchases across multiple devices, today’s consumers have come to expect an omni-channel customer service experience. They want to communicate with the business on their own terms whether being via phone, IVR, web, email, social media, or live chat.
If your business relies solely on phone calls, either with IVR technology or call centers, you could be alienating some consumers. If you aren’t willing to interact the way the customer wants, chargebacks would be the obvious result.
2. Customers Desire an Omni-Channel Experience, but Inefficiencies Negate Potential Benefits
Businesses which offer customer service through multiple channels typically see more positive customer service outcomes.
Moreover, companies have found they are able to resolve 95% of issues raised via Twitter within the platform itself—and it costs as little as $1 each to solve issues this way.
However, if you are focusing too much on the benefits that are up for grabs, you’ll likely miss all the damage that’s being done with an inefficient or subpar effort. For example, Accenture found that 89% of customers get frustrated if forced to repeat their complaints to multiple representatives.
The point of an omni-channel strategy is to meet customers on their terms. Thus, if consumers can’t navigate seamlessly from one platform to another, frustration will increase; causing convenience to decrease, and chargebacks will be the result.
3. Self-Service Could Reduce the Dependence on Human Interaction
Roughly 70% of all consumers expect merchants’ websites to provide self-service tools which will allow them to at least attempt to resolve issues themselves. This proves that, while live support serves a purpose, merchants should also provide the means for customers to find answers to their questions using an assortment of self-service options.
This is why tools like IVR cannot be overlooked. It’s possible to deploy a concise, intuitive IVR interface that will get customers where they want to be in seconds!
Generally, you’ll want consumers to begin their interaction with an automated, self-service application. However, they should have the option to quickly transition to a live person if they choose to do so. This gives the customer a range of choices based on their needs and preferences.
4. Time is of the Essence
When asked about the most important aspect of customer service, 77% of survey respondents agreed that merchants need to value their customers’ time above all else.
Reducing effort and time invested in reaching a resolution is the most effective way to improve customer satisfaction and, in turn, customer loyalty. Conversely, failing to live up to expectations on this front will cause problems.
The acceptable time frames for conflict resolution are shrinking as customer expectations become less forgiving.
- Nearly 85% of customers expect a response to a social media query within 24 hours, and 47% want one in 60 minutes or less.
- Nearly 80% of customers say an appropriate email response time is one hour—but 14.5% expect a reply within 15 minutes..
You need to be quick with responses and quick to provide a resolution. If you don’t, the bank likely will.
5. Chargebacks Resulting from Inaccurate Information are 100% Preventable
It’s not uncommon for customers to attempt unauthorized returns; perhaps being beyond the allotted time frame, unqualified merchandise, or outside the merchant’s policy.
In some of these cases, the customer fully knows that the return attempt is unauthorized. However, there are just as many situations where the customer isn’t at fault due to misinterpreting customer service representatives or receiving incorrect information.
For example, a customer service representative, lacking clarity on the company’s return policy, might promise a refund that isn’t authorized. Or, they may imply a full refund will be issued, but only initiate a partial one.
In cases such as these, the outcome won’t be what the customer expected. It will appear as if the merchant was intentionally deceptive and chargebacks would be warranted.
It is essential that all employees who could potentially come in contact with customers know exactly how to handle any given situation. Otherwise, these easily correctable mistakes will lead to needless chargebacks and revenue loss.
6. Poor Customer Service Now Means a Chargeback Later
Brands often rely on shoppers to be their advocates, and customers generally don’t mind endorsing brands they like. Nonetheless, in training customers to spread news of good experiences far and wide, society has likewise learned to announce negative experiences as well.
In fact, studies have found the average US shopper will tell 16 people about a negative customer experience—nearly twice the audience size that would receive news of a positive experience.
Even worse, this public disclosure has come to replace direct communications with the offending brand. Only 1 in 26 customers will complain about a negative customer experience to the actual business, meaning brands aren’t given the chance to resolve grievances.
If customers feel you’ve handled a situation poorly, they might go online to see if other people have struggled with the same situation. If there are a plethora of bad reviews, the current customers will assume they’ve been “victimized” just like others were in the past. This online negativity will confirm suspicions and chargebacks will be the result.
Never Overlook the Customer Experience
Ensuring customer interactions are convenient and effective is absolutely essential. In doing so, you’ll not only enhance customer loyalty and increase sales; you’ll also avoid easily preventable chargebacks and needless revenue loss.
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Monica Eaton-Cardone is the COO of Chargebacks911. Her company is a leading risk mitigation and chargeback management service provider. They help thousands of merchants in 87 countries and 26 industries create customized and dynamic solutions that are guaranteed ROI. Connect with Monica on Twitter or LinkedIn.