In episode 156 of our podcast, I chat with Tyler Lau from Sandhills Development.

Refunds are something that no matter what you sell, or how large your online store is, it has to be a priority from the very start. Tyler spends a lot of his time working with refunds, so he has been there, done that.

He shares tips, insight and stories around:

What you need to think of when it comes to refunds the moment you start planning your online store.The importance of your policies being clear and easy to find.Whether you should consider cash back, store credits or exchanges.The irate customer, both one-to-one communication and via socialWhen you need to bend the rulesPayPal’s new refund policy.What you need to think about with fraud and refunds.

Tips and Insights on Refunds from Tyler

The first thing to do

The first thing you need to pay attention to is your return and refund policy. This is the document that dictates how the refund process is going to happen. This is where you define the exchange. That means whether it’s a full cash or an exchange for a similar product. Defining this exchange really sets the tone of how the financial part actually happens.

It’s important because this is what you’ll refer to when you say, Hey, you asked for a refund for something you paid for six months ago. You’ve been using it this entire time. You may not have been using it well or making money off it, but you’ve been using it and I can see that you’ve done this for six months.

So you want to build and create a refund and return policy. Even if it’s as simple as no refunds, if it’s as simple as all sales final, that is still a return and refund policy. You just said no refunds. But if you were to go that extreme and have that route, you would still need to write that down in your return/refund policy.

Easy-to-find refund policies

You need transparency. We make sure that ours is visible in at least three places. Very clearly. We have it in our footer on every page. We have it on the product and pricing page. We also have it as a checkbox that you must agree to this before you purchase it.

Refunds are more than just refunds

Refunds, provide a lot of information for you. You may see patterns of repeating issues.

This is a prime opportunity. We’ll give you the refund with no questions asked, so we’ll give you your money. But we do kindly request that you talk about what kind of issues did you have?

I think it comes down to assessing whether the customer’s upset due to the fact of errors we have caused or it has escalated in the duration of our conversation with the customer. Or sometimes it’s entirely out of the blue.

Life happens

The other thing about your refund policy that I advise is to be human about it. A lawyer probably won’t agree with me on this, but don’t always follow at 100%. Use your discretion.

It comes down to making your decision and it’s like life. Things happen. And if your customer has that and has a terrible experience or is dealing with possibly dealing with something that’s so out of the ordinary, be human, just give them their money back. You know, that’s the other aspect of your refund policy.

Cash back, exchanges or store credits

If their products are easily exchangeable and they’re not losing that much off a product, then keep that money in the family and just exchange a product.

In the terms and conditions of the refund and in return policy, you need to define that exchange. Is this something that you have applicable products that you could exchange for? Do you want store credit or do you just simply want that money to go back and reverse everything and that’s all we do, right? You get the money back.

PayPal’s refund policy

If they’re not caught up to what happened regarding PayPal and their refund policy, their refund policy is Pa