Credit balance refunds are not just a bump in the road for companies; they’re an opportunity to transform a common customer service scenario into a competitive advantage. Wirecard’s 2019 Credit Balance Refund Report gets to the bottom of what customers want from credit balance refunds, why it matters, and how to get there.
Let’s be straightforward: a credit balance refund is nobody’s favorite part of the customer journey. But Wirecard’s 2019 Credit Balance Refund Survey revealed that it no longer makes sense to think of the refund experience as an inconvenient detour from your primary goals of acquiring and retaining customers. It’s more of an interesting side trip, with a chance to influence customers’ perceptions of your brand and uphold your organization’s values at a critical stage.
Remember, a refund isn’t always goodbye. The consumers we surveyed said they received credit balance refunds for a variety of reasons — like using less of a prepaid service than anticipated.
Even when customers switched providers, 61% said they’d returned to a previous provider after leaving. 82% of these returning customers said the credit balance refund experience factored into their decision to go back. That’s motivation to make sure you’re giving refunds the planning and attention your customers deserve.
But what does a positive refund experience look like in the digital age? This report delves into consumer preferences, frustrations, and outcomes surrounding credit balance refunds. Overall, our results pointed to the clear role of fast, cost-efficient digital payments in helping companies turn refunds into opportunities.
Wirecard’s 2019 Credit Balance Refund report is based on two consumer surveys conducted in July of 2019. Survey 1: Behaviors and Expectations was sent out to 1,099 respondents. 492 were disqualified because they had not received a credit balance refund in the past five years. A total of 607 consumers completed the Survey 1. Survey 2: Brand Perceptions and Outcomes was sent out to 1,105 respondents. Again, some respondents (507) were disqualified because they had not received a credit balance refund in the past five years. A total of 598 consumers completed Survey 2. In each case, respondents were randomly selected US consumers over the age of 18. Respondents spanned every age category, gender, ethnicity, background, and geographic area within the US.
- 61% of customers returned to a previous provider after switching providers.
- 82% of returning customers said their refund experience was a factor in their decision to go back.
Point A: What Customers Expect From the Refund Experience
Whether they’ve changed providers or simply overpaid, consumers keep a close eye on their credit balance refunds. And just as they expect great things from the products and services that keep their lives running smoothly, they have high standards for a flawless refund payout.
First Stop: Digital Payments
While checks were the most common way to receive a credit balance refund, they were not the most popular payment method. Digital refunds are faster, more efficient, and don’t need to clear the bank, making them the obvious choice for payees. Plus, they reduce costs and operational frictions for payers.
It’s also worth noting that consumers preferred communications about their refunds to be digital, too. A start-to-finish digital experience that blends seamlessly with customers’ busy days is the new ideal.
40.9% of customers received their refunds by checks
How customers prefer to receive refunds?
- Checks: 24.4%
- Account Credit: 27.35%
- Digital Payments: 48.25%
Digital Payments: Driving Cost Efficiency
- Cost to issue a check $3 to $12
- Cost to issue a digital refund Less than $1
- Potential savings when you switch to digital 92% (Based on a 2019 Wirecard utilities case study)
Something For Everyone: The Importance of Choice
Consumers have clear payment preferences based on their lifestyles and degrees of financial participation. For instance, somebody without a checking account may want to receive refunds in the form of a prepaid card that could be added to a mobile wallet for easy use.
But while the majority of customers said choosing their preferred payment method would make the refund experience better, less than 24% actually got their choice. This points to an opportunity for providers to improve the refund experience by offering options that fit everyone.
Getting There Quickly: The Case for Speed
Navigating a new destination has never been quicker or more intuitive. You can find top attractions with a few taps of your phone screen, then map the fastest route in seconds. But the same isn’t true for refunds. Getting a check in the mail (not to mention waiting for it to clear after deposit) can be a slow process. What’s more, nearly 52% of consumers value speed the most when receiving a refund. As expectations for instant gratification grow in other corners of life, customers expect the refund experience to keep up.
Customers’ most important value when receiving a refund
- Speed: 51.7%
- Ease: 15.7%
- Customer service: 10.8%
- Support/troubleshooting: 2%
- Choice: 19.8%
Point B: What Better Refunds Mean for Your Company
If improving the refund experience currently falls low on your list of priorities, now’s the time to change directions. A smooth refund not only matters next time a customer considers switching providers, but it’s also a factor in whether they leave a positive review or otherwise sing your brand’s praises.
Even more reassuringly, refunds offer the rare opportunity to upgrade the customer experience while also reducing costs. Often, speed and efficiency come with a steep price tag, but that’s not true with digital refunds. Trading checks for digital payments can actually lower issuing costs by as much as 92%, as Wirecard found in a 2019 utilities case study. When customers’ ideals track with cost-efficient solutions, making the switch is a budget-friendly no-brainer.
When Good Customers Go Back
Customer winback happens more often than providers realize. And while cost was the most common consideration when consumers returned to a previous provider, 25% said the existing customer experience factored into their decision.
This is great news for providers, because the exiting experience is something they can fine-tune at every step. Even if you can’t control all the reasons why customers part ways with you — like when they move out of your service area — you can control one aspect of their journey: how easily they navigate the credit balance refund process.
61% of customers have returned to a service provider they used in the past.
Factors that influence customers to return
- The existing customer experience: 25%
- Choice of how to pay my bill: 18%
- More service options: 27%
- Cost: 57%
- Better quality of service: 42%
- Other: 2%
Social sharing tends to be triggered by standout experiences, be it a hike to an awe-inspiring overlook or a customer service win that saved the day. The majority of consumers said they’d share their positive refund story online or in conversation with friends and family.
Unfortunately, consumers were also likely to share negative refund experiences — in fact, slightly more so. This points to refunds as a critical engagement opportunity that can make a difference in what goes public: a less-than-satisfying experience or a five-star review.
The Turnaround Point: Fixing Customers’ Frustrations
When the customer refund experience takes a wrong turn, there’s usually a simple fix. That’s particularly true of customers’ top frustration: a long wait to receive a refund. Digital payments offer a clear way around that issue, by presenting the choice of near-instant access to funds. And since digital payments are easily trackable and follow consumers, not their residences, they eliminate the chance of refunds going to the wrong address or not making it to the customer, at all.
- 51% of customers are likely to tell their friends, family, and/or coworkers after a positive refund experience…
- 50% of customers will do the same after a negative refund experience.
Customer Roadblocks, Resolved.
Long wait for my refund: Choice of real-time digital payment
Refund sent to the wrong address: Digital communications follow a customer’s email address, not their residence
Never received my refund: Digital touchpoints make it easy to track customer activity and verify receipt of refund
Not my preferred payment method: Through a digital touchpoint, customers can choose from options ranging from virtual card to traditional check
Poor customer support during refund process: An integrated customer service solution eliminates frictions
Have you ever been surprised by a detour that turned out to be more scenic than you expected?
Refunds have the potential to be that promising backroad. Upgrading how you handle credit balance payments ensures customers are repaid in less time and with less hassle, leading to positive brand perceptions and the best kind of social sharing. Going digital will even reduce your issuing and operational expenses, meaning a timely upgrade to your refund process has both direct and indirect cost benefits. In short, it’s time to reinvent refunds as a positive experience — one that offers a better way forward for both you and your customers.