Most subscription chargebacks are based on customer claims of fraud or clerical errors, and while businesses can and should take aggressive steps to work with credit card companies and banks to dispute those chargebacks, doing so is mostly a matter of retaining that one-time revenue. After all, it’s very unlikely that a customer who has used a fraud claim to initiate a chargeback is going to be a promising target for retention.
From a retention stand-point, the most important type of chargeback for a business to target is one based on customer dissatisfaction, as it indicates an opportunity to pitch a persuasive re-evaluation of the product’s value. To do so, companies should keep the following information in mind.
The most effective retention efforts leverage different trigger points for different types of customers. Robust customer information gathering is a necessity in this pursuit and should allow a company to classify promising retention leads in one of the four following categories:
These customers are difficult to retain, as they have explicitly not even decided to make an actual purchase yet. They’re most often encountered in a chargeback scenario during a conversion from a free trial period to the actual paid subscription. They’re characterized by a “fact-finding” set of behaviors, and should be pitched compelling information about the utility and strengths of a product, especially versus its competitors.
Impulsive customers are also frequent sources of chargebacks during a free-to-paid conversion, and since their defining characteristic means they may have signed up for the trial on a lark, there’s a good chance they haven’t given the product a real try to begin with. They make good targets for aggressive individual outreach that highlights what a product can do for them, along with pro-active invitations to resource tutorials and walk-throughs.
These customers are mostly motivated by simple price points, and especially frugality. A chargeback from them doesn’t necessarily mean they don’t appreciate the product, it simply says they’ve re-considered spending money on it. They are ideal targets for extensions of free trials, or aggressive introductory price cuts.
A functional or need-based customers is primarily interested in what a product can do for them. Price concerns and service are often secondary to a clear explanation of the exact utility that a product offers.
By effectively targeting a customer for an appropriate retention strategy, satisfaction-based chargebacks can be reversed, and in the best case, convert a dissatisfied customer into a loyal subscriber.
Want more tips on how to reduce chargebacks? Download our Reducing Chargebacks and Fraud guide, where we reveal the full cost of chargebacks and our top actionable tips to minimize your losses: