I mainly focus on websites and online marketing, but I really have a passion for small businesses. I like helping them be successful. This week I was out at a small business as a customer. I wasn’t working with the business. While there I overheard a conversation the owner was having with a customer. I wasn’t eavesdropping on purpose. This conversation was happening in pubic in front of other customers. I’m leaving some details vague to not identify the business.

The customer came in with an item she recently bought, and explained to the owner that when she got home she found that there was a chip in the item. Please, keep in mind this was a $10 item at maximum. The woman asked for a refund. The owner responded by saying he had no way of knowing if the chip had happened before she bought the item, or if she did it after she left the store. The woman responded that she noticed the chip once she got home, and that she didn’t put the chip in it. The owner went on to explain that customers need to closely inspect items before they buy them. After some additional hesitation he offered to exchange the item. The woman said she would take an exchange, but they don’t have that same item anymore.

After even more hesitation the owner gave the woman her money back, and said his policy in the future is to not take returns on items that are damaged. The way the conversation went it seemed like they didn’t even have a policy or process for returns up to this point. After the woman left the owner and an employee continued talking about how the woman probably chipped it at home. He only seemed concerned about not having to give back $10. Maybe it was a pride thing? Ultimately, he was calling the woman a lier. Do you want to do business with someone who calls you a lier?

The Problem With Trying To Save $10

I can understand that the owner doesn’t want to continually give refunds for merchandise that customers break. The price of the merchandise will add up. That woman may or may not have broken the item. No one will ever know, and I bet the woman doesn’t even know. Who knows maybe she chipped it without even noticing.

Even if she is lying here is the problem. That woman is going to think twice about buying anything from that business again. It is very likely she won’t buy anything there ever again. Who knows, if this hadn’t happened, she might have become a regular doing business there often. That conversation could have cost thousands of dollars over the years. This woman will probably tell her friends and family about her experience. Here entire circle of influence now have a negative view of the business.

The effects reach wider than just with that woman. After hearing that conversation I am now hesitant to buy anything from that business in the future. What if I get a defective item? Will I get a refund, or just a hard time? I don’t think that is a risk I want to take. I was starting to become a regular at this business. Now I am thinking twice. I think the conversation has cost a lot more than the $10 the owner had to give back.

A Better Way

At the end of the day all people really want is to feel that the business cares. The majority of customers are going to be honest, good people. Keeping that in mind here is how to respond:

1. Show that you care by saying something like, “Oh I’m so sorry that the item is damaged.” Be sincere!

2. Offer to exchange or refund without a hassle. If someone truly wants the item they will take an exchange. If you don’t have another of the same item, offer a refund. No questions asked.

You are going to make the customer extremely happy, and they are going to trust you. Your business will be the first one they think of for all future purchases, and they will tell their circle of influence how great you are. These days with social media (Facebook), and online review sites (Yelp) circles of influence are much larger than ever before. Giving back the $10 will get you a customer for life. Don’t forget the other customers who overhear how you handle refunds. Handle it well and you will gain trust with several customers all at once!

Of course, if someone is continually returning items, or is consistently difficult to do business with you shouldn’t just sit there and take it. Handle each situation on an individual basis. Also, this may not work for every industry or every business. However, this will work like a charm for most small businesses.

It can be frustrating to have returns, and as the business owner you can feel like people are trying to take advantage of you. The thought of loosing a sale is never fun. However, always try to give people the benefit of the doubt, and don’t let the emotion get in the way. Have a clear process and policy for returns. That will give you a chance to think through how you want to handle returns. That way when a return situation comes up you just follow the process and the emotion will be taken out of it.

What do you think? How should the owner have handled the situation?

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About the author

Damon Schopen designs and develops web-based software. He specializes in e-commerce, interactive websites, integrating software to allow sharing of data across systems, and customizing existing software applications to meet your specific needs. For the past 10 years Damon has helped a variety of companies develop the web-based software they need to do business with their customers.

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