When you are the face of a service-based business, it can be horrifying when a client cancels an upcoming appointment, wants to drop out of your ongoing program or worst of all, requests a refund. If it starts to happen regularly, you begin to question the sustainability of your business. In this blog I explore ways to set up policies that allow both you and your clients to feel comfortable and cared for, even when the relationship between you doesn’t go according to plan.
A bad fit is not your fault
As always, best business practice starts with you and your mindset. Think about the gamut of emotions you might run through when a client no longer wants to work with you. Everything from panic and self-doubt to anger and blame. Not only is there the loss of income, it can damage your self-respect and your belief in your services, if you let it. The very first step, therefore, is to take a moment to acknowledge that not everyone is the right person to work with you.
Everyone is on their own journey. Some clients will be attracted by the solution you sell but not be in the right space to do the work needed to get themselves there. They may be looking for a quick fix and be disappointed when you fail to provide it, or they may jump in without stopping to think about whether this is something they can realistically commit to right now, and then have second thoughts. Others might begin with the best of intentions, only to find themselves facing a monumental amount of internal resistance. There are all sorts of reasons why people might change their mind that have nothing to do with you.
Step into your clients’ shoes and try to identify where the main stumbling blocks are for them. What reasons might they have for changing their mind? Look at both the external stories they are telling themselves and the underlying subconscious factors that are turning their “yes” into an “actually, no.” If you can address these issues in your terms of service and your marketing, you will start to weed out those who are not really suited to working with you before they put money in your account. It might seem counter-intuitive to be actively discouraging people from buying from you, but I promise:
- you will waste less time and anxious energy if you don’t have to deal with people who are not a good fit
- you won’t have the administrative hassle and financial strain of dealing with yo-yo payments, where clients put money into your account only to try and pull it back out again, and
- you will open up more space in your business to attract those who are truly thrilled to be working with you.
Get clear on your core values
Managing your own response begins with deeply understanding what you value about your relationship with your clients, your personal presence in your business, and what feels right to you. Australian consumer law says that there is no obligation to offer a refund when a customer changes their mind about a purchase, so this comes down to what you want to do.
Begin by considering your current practice. There is no point telling yourself you need a strict “no refunds” policy if you know you are a generous, compassionate pussycat at heart who will not hesitate to return someone’s money if they tell you they are unhappy.
There is absolutely nothing wrong with that, by the way! I offer a 100% satisfaction guarantee to all my clients, because I know that my reputation and my clients’ respect is very important to me, and I prefer to look for win win solutions in every situation.
Going with your generous nature does not mean turning yourself into a doormat and letting everybody trample your boundaries, however. It means seeking out a solution that feels totally fair and respectful, both to you and your clients. Let your creativity loose on the problem.
One of the most interesting and aligned change of mind policies I have ever seen comes from Tad Hargreaves, from Marketing with Hippies. His 30 day sales challenge, The Meantime, comes with a promise that if you show up and do the work, and still feel that the results were not worth your time and money, he will not only refund what you paid, he will double the refund from his own pocket. This is genius because not only is it attractive evidence of his belief in the value of his work to those who are a good fit, it ensures that anyone who wants to access the refund needs to have put in a proper effort before they drop out.
Another way to put boundaries around a policy that still allows you to be generous is to use timelines, sliding scales and pro-rata refunds. So, for example, you might offer a 100% refund to those who change their mind up to a certain time before your work begins. (Think about how far in advance clients book with you to decide what is reasonable. It might be a month, a week, or 48 hours.) Then there might be a window where clients can cancel and access a refund minus a booking or administrative fee, that compensates you for having held the space open for them and not filling it with other clients. If a client changes their mind after they have started working with you, think about whether you have good reason for locking them in to a longer-term process. If they need to commit to themselves and are partly paying you to hold them accountable for fulfilling the promises they have made to themselves, you may choose not to offer any refund once they start work. Alternatively, you might decide that is better to let someone go while still being paid for the work you have done to date, in which case you might have a policy of only refunding unused sessions. You might offer them a value other than money, which is what I do. I commit to invoicing only at the end for my drafting services, so I can keep working on a project until we are both totally happy with the result. You might offer to give a full refund but only if they notify you that they are not happy within a certain time after their session.
There is no right or wrong. Think through the possibilities and come up with something that feels totally right for you.
Communicate with clarity
Having a great refund policy that makes you really happy is awesome, but it won’t help you much unless your clients know about it too. One of the main reasons for Website T&Cs and making your Terms of Service available for people to read before they buy is so that they can be aware of your policies before they break open the PayPal piggybank.
You should not just rely on putting the information in your legals though. Now that you have got your policies, make sure all your marketing is aligned with them. Tone down your advertising hype to avoid unrealistic expectations and filter out those who don’t belong in your funnel. If the work involves a long term commitment that you intend to hold them to, warn them in advance, and urge them to consider carefully if this is the right choice for them before they buy.
Slow down the sales process and give them a little more time to think. For higher priced offerings, maybe offer them an opportunity to chat with you and ask their questions. This should not be a pushy sales call but a genuine opportunity for curious connection, where you have a chance to demonstrate the value you can offer, and they can feel into the investment and decide whether it is right for them. A clear and conscious commitment from a client who has thought through the pros and cons is always preferable to an impulse buy from someone who feels pressured into a purchase they are likely to regret.
If there are specific sections of your policy that you really feel it is important for people to know before they buy, put them into your marketing, or add a tick box or two. There is nothing stopping you from going beyond the generic:
“I have read and agree to the T&Cs”
(which you know nobody is going to have read) and instead having something more personal like:
“I have thought carefully about whether this program is right for me, and I understand I will not receive a refund if I change my mind.”
If you have a client agreement or terms of service that they have accepted by ticking a box, send a copy with your welcome or onboarding email – and invite them to actually read it. (This is easier to do if you have a contract that cares, where you understand and believe in what it says yourself!)
Flexibility brings freedom
Finally, do what feels right for you. You can stay open and curious about what is going on for other people and respond with empathy without trampling your boundaries.
Sometimes you might need to pick your battles and understand that drama has hidden costs. There may be times when it is worth paying the refund so someone will go away and leave you alone, because there is all kinds of crazy in this world that is beyond your control.
If you have a stricter policy (and again, there is absolutely nothing wrong with that) you might want to write in a discretionary power for yourself. For example you might say something like:
“I do not offer refunds if you change your mind, or cancel within 48 hours of your first session, so please choose carefully and make sure this is right for you before you buy. If you have any questions, you can contact me [here]. However, I do understand that life can go haywire sometimes, so if you have a genuine emergency, please get in contact so we can discuss the situation and negotiate a mutually acceptable solution.”
How I can help
Change of mind refunds, last minute cancellations and clients who drop out of long-term working relationships can all dredge up the demons of self-doubt and despair. Rather than letting them destroy your business, take them as an opportunity to really ground your marketing and policies in building the best possible relationship between you and your clients. The more you encourage those who are not your ideal clients to self-select out of wasting your time, the more you can channel your energy into those who love working with you so much they become raving fans, recommending your services to all their friends. Why would you let another day be ruined for lack of a refund policy that shows respect for you and for your clients?
Refund policies are only one important component of building a successful client relationship. If you know you need to get started on putting these pieces in place, check out my Contracts that Care. From DIY to VIP, if you can’t find what you need, I can create it for you.