Running a business is no easy feat. The modern-day entrepreneur needs to wear multiple hats, be familiar with a wide variety of industries, and have a strong ability to communicate with both investors, team members, and, of course, clients.
The world of entrepreneurship opened up over the past decade or so, as the internet and various smart technologies created avenues that made it much easier to go into business for oneself. This is true from a sole-proprietorship or freelance perspective, all the way up to full-blown international organizations that started with a little online presence.
More media outlets about entrepreneurship also started to hit the mainstream consumer channels. From shows like Shark Tank popping up, to endless podcasts, blogs, and novels created by successful entrepreneurs who are willing to guide the young and driven with life-learned-lessons of success, there seems to be endless possibilities for this career avenue.
With all these resources available, the small business, startup organization, and freelance community is healthier, more vibrant, and more diverse than ever. That being said, it’s important for these businesspeople to know and understand how to deal with a client who is asking for a refund.
“Whether you need to take a look at the expectations you’re communicating to clients, review the way you approach refunds, or find a way to protect your heart a bit from the nastier commentary—I give you full permission to move forward with those shifts confidently and with the knowledge that we’re all only human.”
– Jenna Kutcher, Digital Marketing Expert and Author –
Evaluate the Experience
First and foremost, when someone approaches you with a refund request, it’s important to conduct an evaluation of the experience overall. Off the bat, you may feel defensive, attacked, and have the urge to respond in a quasi-combative manner. However, this typically only serves to worsen the situation.
Instead of jumping into the conversation with a rash impulse and your immediate reaction, take a little time to let the refund request settle in. Then, when you’ve managed to find some tranquility and acceptance, try to be truly objective in an evaluation of the client relationship and work experience as a whole. Doing so will give you insight into any miscommunications that may have taken place and can help you avoid similar situations in the future.
“If a client asks for a refund, it’s fair to be sensitive about it. At the same time, though, it can offer a good opportunity to garner insightful, and sometimes extremely helpful, feedback. It’s not an easy thing to tackle, but it can be helpful in the long run.”
– Brian Lee, Co-Founder and CEO, ARENA CLUB –
In taking a truly objective look at the experience as a whole, you can use this as a chance to learn about yourself, grow, and improve your operations in the future. It’s never fun to deal with an unhappy customer, and it can be demoralizing to have to issue a refund. However, if you’re able to learn from the experience and identify what went wrong, you can actively work to avoid similar issues with clients moving forward.
“Being objective isn’t always easy, especially if you’re working for yourself or building a freelance or startup business. It becomes your passion, your life, your dreams. That said, there are situations where objectivity will be the best tool at your disposal.”
– Alexandre Robicquet, Co-Founder and CEO, Crossing Minds –
Approach the Conversation With Empathy
Empathy and emotional intelligence are hot topics of discussion in today’s professional workplace; this is due to the evidence that highlights the role emotional intelligence and empathy play in creating a positive, productive working environment.
That is the same on the client-side of things as well. When a client asks for a refund, they’re likely upset and coming from an emotional place. Do your best to put yourself in your client’s shoes and understand the reason they may be asking for a refund.
“Sometimes people are simply just projecting, and it isn’t about the refund at all; it’s actually about something that happened with their sister-in-law or their taxi driver on the way over. The refund request is just an emotional response to atmospheric situations you have no control over. Understanding that can help you avoid a lot of self-doubt.”
– Andrew Adamo, VP, Bullion Shark –
Practicing empathy with upset and angry clients can also help you gain an even stronger reputation amongst consumers. People want to work with professionals who are pleasant and easy to work with. By showcasing a high level of composure while facing an unruly client who is demanding a refund, you establish yourself as cool, calm, and logical.
“Empathy is important to understanding the internal drivers that are motivating someone to act in a certain capacity. In this way, if a client approaches you about a refund and you respond with empathy, you may be able to come to a more equitable solution for both parties.”
– Kim Walls, CEO and Co-Founder, Furtuna Skin –
Refer to a Refund Policy if There Is One
If you’ve been in business for some time now, this likely isn’t your first rodeo with a client refund. One of the best ways to protect yourself from unfair refund requests is to simply compose and implement a refund policy that clearly defines the appropriate situations in which a refund will be issued.
“Having a refund policy written is a good way to protect yourself and to inform your clients of what does, and does not, constitute a refund request. If someone approaches you about a refund for a situation that isn’t listed, you can feel confident in saying ‘no’ outright, or at least explaining that you’ll need to consider the specifics of the situation before issuing one.”
– Bryan Jones, CEO, Truckbase –
If this is your first time dealing with a refund request, there’s no better time than the present to consider what other situations you believe warrant or justify a refund request. Write these situations down and create an official refund policy for yourself to refer to in the future.
“No one is a perfect businessperson. We all make mistakes, so having some type of refund policy is typically pretty wise, but make sure it’s clearly defined so that you aren’t continually taken advantage of.”
– Matt Masiello, Chief Marketing Officer, BabyBuddha –
Decide if a Refund Is Appropriate
After considering the refund policy as it’s written, you may still want to consider the extrapolating details of the specific request. In taking your time to factor in the different events and details of the client interaction and experience, you should be able to naturally come to a decision about whether or not a refund is appropriate and justified.
“Every business deals with situations where things don’t go exactly as planned, and that’s okay. Make a point to respond promptly and professionally, and there’s no doubt that you’ll be able to deftly resolve any obstacle that your business encounters.”
– Katy Carrigan, CEO, Goody –
Once you’ve decided whether or not a refund is actually appropriate, you’ll need to inform the client of your decision. Even if you’re denying their request, you can still do this in a polite, professional, and mannered way.
“Professional communication is growing in importance in the modern working world. This is true at every level, from internal communication with team members to external communication with investors to client communications. Handling communications with professionalism will help you stand out in a big way amongst your competition.”
– Alex Novak, CEO, SLR –
Issuing a Client Refund
Finally, at the end of the day, you’re likely going to have to issue a few client refunds over the course of your career as an independent freelancer, small business owner, or startup entrepreneur. Taking these moments to reflect on your business offerings and the experience with that specific client can lead to major innovations within the model and operations of your organization.
“As a business owner, you have to look at failures not as such, but as a learning opportunity. What can you take away from this moment? How can you move forward and be slightly better each day? These are the questions worth spending your energy on.”
– Jesse DeBear, Fractional CMO, Renew –
Additionally, by being cordial, polite, and coming to a compromise that results in a refund, you can actually win the favor of that client moving forward, and perhaps extend the relationship into a future project, therefore giving you a second chance.
“Issuing the refund doesn’t always have to be a loss. In some cases, it’s an opportunity to build rapport with your clients, and show you are willing to put what they need first. For clients, this can be enough to want to stay and continue working with you.”
– Michael Baghoomian, CEO, Muscle MX –
Final Thoughts on Client Refunds
There is no escaping clients in running and operating your own business. As such, you’re almost certainly going to come across a moment in which a refund is demanded. Don’t panic; you can handle this, learn from it, and come out the other side with a fresh perspective and a whole lot of knowledge.
“A request for a refund can turn a good day into a bad one. If you handle refund requests tactfully, the experience doesn’t have to be a fully negative one.”
– Taylor K. Gordon, Founder, Tay Talks Money –
