How Chargebacks Impact the Customer Experience
How does a merchant’s chargeback management strategy effect the quality of customer relationships? Do disputes and prevention efforts impact customer satisfaction, trust and commitment?
Can merchants protect their bottom line and their reputation?
The Key to Success: Identifying the Source of Chargebacks
It's not a wholly unwarranted concern: merchants don’t want to risk disputing chargebacks caused by true criminal fraud. The effect would be similar to calling the customer a liar right after he or she had been victimized by fraud. Talk about adding insult to injury!
However, simply accepting all chargebacks allegedly resulting from criminal fraud isn’t advisable, either: chargeback reason codes were created in a pre-internet era, meaning there are loopholes in the archaic system that uninformed or unscrupulous consumers can exploit. This so-called "friendly" fraud can be disguised with virtually any reason code—including codes that are associated with unauthorized transactions.
As much as 86% of all chargebacks are cases of friendly fraud—not criminal fraud as the reason codes typically imply. Rather than accepting these chargeback codes at face value, merchants need to determine the real reason for the chargeback.
Merchants have a great deal to gain by engaging in chargeback representment, but only if they can distinguish the true source of their chargebacks. Our exclusive Intelligent Source Detection solution is the only way to isolate chargebacks by source...without it, merchants are fighting blind.
Two Chargeback Issues that CAN Harm Customer Loyalty
Avoiding transaction disputes through effective chargeback management is dependent on the right tools being applied with the right logic. An absence of these key elements can have negative, long-term consequences—including damage to customer retention rates.
When it comes to representment, human oversight is absolutely imperative. Solutions reliant entirely on automation could cause significant customer relations issues.
Automated systems will submit all available information associated with the customer and the transaction in question. This might include everything from profanity and insulting comments made by the customer service representatives to an admission of actual mistakes the merchant made. Considering this information will be viewed by both the bank and the customer, automation without human oversight can easily damage the merchant’s reputation.
Moreover, static, automated representment products will ignore everything that looks like criminal fraud, meaning that a lot of chargebacks which could have been won will slip through the cracks.
One of the defining characteristics of Chargebacks911’s Tactical Chargeback Representment product is expertly-applied human forensics. Not only does our approach recover lost revenue with greater success, but it also protects the merchant’s reputation and retains satisfied customers.
2. Disparaging Comments
Unsatisfied customers who complain online about their experience can damage the merchant’s reputation. This reputation damage can prevent future sales and cause higher churn through the perception of low quality and overall satisfaction.
When customers publicize their grievances, merchants experience more chargebacks. Customers feel a comradery with other unsatisfied shoppers and assume they are just another victim of a ‘fraudulent’ merchant.
Merchants need to monitor their online reputation carefully and respond to public grievances. However, this can be a time consuming process. BBB Review Mediation will ensure customers’ issues are addressed without funneling valuable in-house resources away from revenue-generating departments.
The Importance of Challenging Friendly Fraud
Challenging friendly fraud is about much more than just recovering lost revenue; it is a unique opportunity to optimize long-term success.
Merchants who forego their right to representment create a vicious chargeback cycle with dangerous, long-term implications.
Reduced Chargebacks and Happy Customers
Fortunately, merchants hoping to avoid transaction disputes aren’t in an ‘either-or’ situation, but rather a ‘both-and.’
It’s not an issue of either effective chargeback management or satisfactory client retention rates; it’s a case of both stable, profitable payment processing and gratifying customer relations.
Finding this perfect balance, however, is seldom easy.
That's why you need a representment expert who is also a customer retention specialist. You need tactical disputes with an understanding of what should and shouldn’t be fought. You need Chargebacks911®.