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How To Increase Your Profit Through The "backdoor" - Part 1

May 18, 2008
You make a $97.00 sale and you say an emphatic "Yes!" as a smile breaks out on your face. This selling online thing is cool and it feels good to be getting sales.

Then, a few days later you get a refund request. The $97.00 is gone. And so is your smile.

Or, worse still, a month and a half later (after you've spent the $97.00) a chargeback hits you. Not only is the $97.00 gone, but you've also been zapped $20.00 in service fees.

Instead of making money, you're losing money.

Now, to be sure, that doesn't happen on EVERY single sale. If it did, we'd all be out of business. But, it does happen frequently, from 2-10% of the time depending upon your offer.

Regardless of how often it occurs, when it does, it takes money out of your pocket.

So much emphasis is placed on ways to "make money" that many people forget to focus on how to KEEP the money that you make.

In today's article (with part 2 coming later) we're going to talk about increasing your profit through the "backdoor" by identifying 10 ways to reduce refunds and chargebacks so you can make the most money possible from your internet business.

The best part is this: most of them take just a few minutes to implement and most of them don't cost a penny.

1. Be Accurate In Describing Your Product.

Probably the most common "legitimate" reason for a refund is when the product or service doesn't deliver what was described during the sales process. When you create advertisements and salesletters, it's important that you be accurate in describing your product.

This involves both...

* "Avoiding hype" which creates unrealistic expectations that ultimately lead to disappointment with the order. Your advertising sets the tone for what "results" the customer feels they can accomplish. If your claims are found to be unreasonable (or downright false) then refunds will often follow.

* "Correctly Define" the components of your product including its type (I.E. digital goods vs physical goods), its size (I.E. 20 pages vs 200 pages) its delivery (I.E. Immediately after order vs within 7 days) its required skills or knowledge (I.E. For beginners vs experienced) its exclusivity (I.E. Common knowledge vs your unique offering) its compabibility (I.E. PC only vs Mac users welcome) and its freshness (I.E. Updated for 2006 vs last year's news) to name a few.

Perhaps the easiest way to turn back refund requests is to be clear in what your product or service offers without raising false expectations.

2. Offer Several Unadvertised Bonuses.

After the sale has been completed, let the customer know that you'll be sending them 4 or 5 "unadvertised" bonuses over the next several weeks via email. You can even list what those bonuses are and their delivery schedule.

Example: In exactly 7 days you'll receive unadvertised bonus one, an 18-page report entitled "27 Ways to Attract Butterflies Year Round".

These unadvertised bonuses can be extra reports, articles, audio/video, interviews, tools, etc. The important thing to remember is that they should be related to the original purchase (I.E. an extension of the base product or service being offered) and should be desirable enough to add real value to the order.

I recommend that at least one of your bonuses be a "list" report with more than 20 entries (I.E. "27 Ways to Attract Butterflies Year Round", "Top 20 Shortcuts For Starting A Christian Bookstore" or "The 21 Best Homeschooling Time Savers"). When it's over twenty entries, it has a tremendous perceived value.

And that's the point here: add more value to the existing purchase. The more bang your customers get for their buck, the more likely they'll be satisfied and NOT request a refund.

3. Clearly State The Billing Name.

For most people selling goods online, their name or company name WILL NOT be the one listed on a customer's credit card invoice or checking account log. Generally, it will be a third party company such as CLICKBANK. Unfortunately, many vendors forget to tell the customer what the charge will appear listed as in their records.

What happens is this: A customer buys a product from Paula J. Brown. In a month or so, that customer gets their credit card statement in and sees "Clickbank / Keynetics" listed. They don't recall doing business with Clickbank / Keynetics and instead of investigating to see what it is, they either refute the charge to their credit card (resulting in a chargeback - ouch!) or they contact Clickbank and say "I don't recall ordering this - refund it now."

Either way, you're out of a sale.

Always make sure you clearly state what name the transaction will be listed under when the customer receives their statement. Do this on both your "thank you" page AND in your initial email message to your customer.

4. Be Specific In Your Guarantee.

There is a great debate on how to use guarantees. Some people argue that given a lengthy guarantee (I.E. 12 months or even lifetime) is the best option because it shows that you stand by your product and instills greater buying confidence in the customer. Bad news is, in six months when Christmas comes along and the customer needs some extra money to buy gifts, your guarantee comes to mind.

Other people argue that a shorter, limited guarantee (I.E. 30 days or "show that you've tried to use the product") is the preferred way to go simply because it gives less time for refund requests and generally attracts a more quality customer who is less likely to want their money back. Bad news is, if the customer isn't completely "wowed" with your product or service, they'll likely ask for a refund very quickly after their purchase to avoid missing out on the guarantee period. And if you attach too many strings to your guarantee (I.E. You must PROVE you've tried to use the product without success), you'll likely lose some sales.

Truth is, there is some truth to both options. And I'm not going to tell you which one is best for you. (Although, if you use someone like Clickbank, it takes the debate out - they REQUIRE a limited, 30-day guarantee period. If you process orders via a third-party, check for their specific terms on this).

But, at the bottom of the page, here's the conclusion that I've come to based on my own numbers: a longer, liberal guarantee works best overall. That is, while you will have a few boneheads that ask for a refund three years after they've purchased it, generally you have MORE sales (because they have greater "trust" in you based on your guarantee) and actually have LESS refunds (because people forget all about you and your product after a few weeks).

5. Create A Frequently Asked Questions Page.

Setup a special page with the 10-15 most frequently asked questions (along with detailed answers, of course :-) and make note of this page in your initial follow-up message with your customer (You know, "Hey, thanks for your order...") AND on the order fulfillment page (I.E. "Download page").

Just a few of the things you'll want to include on this page are...

* How to retrieve passwords
* Tips for overcoming common errors
* How to download materials
* When "unadvertised" bonuses will arrive
* How to track orders (If applicable)
* Best way to contact you

How does this reduce refunds?

In a variety of ways, actually. Just one would be: considering the reliability (or lack thereof!) of email these days, you could miss a question from a customer altogether, resulting in frustration or a feeling of getting "scammed" which will result in a refund.

Not only will you reduce your refunds, but you'll also dramatically reduce your customer support. A surefire winner.
About the Author
Of course, there are MANY other ways to increase your profit! Check out " The Upsell Report: 24 Ways To Get Your Customers To Spend More Money " by Jimmy D. Brown. You'll learn an amazing 24 different ideas for getting your customers to spend more money (sometimes 300-400 or 500% more!) Studies show as many as 1 in every 2 customers will automatically buy if you just offer one of these items.
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