Membership Refunds: What’s the Best Policy?

A policy for membership refunds might be the last thing on your mind, but it is one of the foundational policies you need in place before your membership website takes off. You are building your membership site to maintain customers, not to plan on losing them. But the best way to ensure happy customers is to have a policy in place for those times when refunds happen.

Of course, getting refund requests for membership fees can be quite frustrating after all of the work you’ve put into building your site and creating valuable content. Unfortunately, refund requests are one of the necessary evils of running any business, even when your membership sites work flawlessly.

Membership Refunds Happen

If you’ve poured your heart and soul into your work, it can hurt when you see a member cancel or request a refund. You’re confident in the content you produce and the value you provide to your customers, and the last thing you expect is to lose a member because they didn’t find value in your product.

But, more often than not, membership refund requests have nothing to do with the value of your membership program. Often, certain members may have extenuating life circumstances that no longer allow them to afford the cost of a membership to your site.

This means that, as a membership site owner, you should never take refund requests personally. It is easier to keep it all business when you have a return policy in place. It will help you know how you should handle refund requests that will be a part of your day-to-day operations. A return policy also makes it easier to publish guidelines for returns so your members know what to expect. By determining these procedures ahead of time, you can help ensure that you have the fairest policy in place – for you and for your members.

In this guide, we’ll shed some light on the different aspects of membership refunds.
By the end, you’ll be able to formulate a membership refund policy that works for your business.

Understanding Membership Refunds

There are many different reasons why your customers might request a membership refund after they’ve already become paying members.

• Some customers may have intended to cancel their membership prior to renewal, but forgot
• Others could have gotten their payment date wrong and allowed their membership to lapse
• Still others may have been misinformed or confused about the benefits of a new membership and, once behind your paywall, decided that the membership doesn’t fit their needs
• Some members may have decided that they cannot afford the cost of a membership any longer
• Members who are too busy in their lives to fully benefit from your membership may decide they want a refund

Whatever the case may be, avoid the trap of taking membership refund requests personally. In fact, the best thing you can do when you get a refund request is learn why it happened. Then, if there are ways the situation could be avoided in the future with other members, apply what you’ve learned as you move forward.

More on that later in the guide.

Is It Possible To Prevent Refunds?

Before we dig into a membership refund policy in full detail, let’s discuss some of the best ways to prevent refund requests before they happen. While they can’t be avoided entirely, there are certainly some tangible things you can start doing today that will minimize them.

Here are four strategies you can employ on your membership site to help prevent as many refund requests as possible:

1. Offer Members a Free Membership Tier or Free Trial Membership

If site users are required to plug in their credit card number (and you immediately charge a yearly membership fee) before they get a peek behind your paywall, you’re inviting a lot of refund requests.

To solve this problem, allow site users to try out a membership with you before committing to a yearly membership fee. Consider offering a free seven-day trial that gives full access to all of your members-only content.

Or, offer a free (and limited) membership tier where site users can join and review some of your premium content prior to becoming paid members.

2. Keep In Close Contact With Members

Active and engaged members are the ones that will remain with you the longest. And rarely will a loyal member of your site request a membership refund.

To help your members feel like they are a part of what you’re doing, send them regular newsletters regarding updates to your site. Also, let them know the moment you publish new and exclusive content.

Anything you can do that makes your members feel like they are a key part of your community will keep them engaged and far away from requesting a refund.

3. Send Out Reminders When It’s Time To Renew

Cut back on refunds that come from lapsed renewals by reminding your members about any automatic payments well in advance of the actual payment date. Make sure users are aware of recurring membership payments BEFORE they happen.

Additionally, it’s important to always be accurate and transparent in your marketing, sales pages, and web copy. Bringing in more membership sales by omitting information (or over-selling with inflated promises) will lead to more refunds in the end.

The more transparent you are with your members, the fewer refund requests you’ll deal with.

Terms and Conditions

Always remember that properly managing customer expectations is one of the best ways to avoid refunds. How clear are you with your site users when it comes to the details of your membership program? 

To manage the expectations of your customers, you must be as clear as possible about exactly what a membership will look like before they buy. Look through your website with a fresh eye to determine how effectively you’ve explained the details of membership.

Are there any stones you’ve left unturned? Are there areas where a customer could easily become confused or misled?

When you’re 100% open and transparent about your membership policies, it’ll help distinguish you as a responsible site owner. Ultimately, it will also give your members the trust they need to commit to your site for the long haul.

When the terms and conditions of your membership are clear, detailed, and well laid out, prospective site members will know that they are making an informed purchase decision when they decide to pull out the credit card.

But that doesn’t mean that you should stuff your terms and conditions with confusing legalese. Rather, you want to use clear, concise, and deliberate language that’s casual and friendly enough that anyone can understand it.

This approach to your terms and conditions is much more inviting than copying and pasting outdated legal language that even you don’t understand. In fact, legal language often puts customers on edge and can make them skeptical of your entire program.

Money-Back Guarantees

A money-back guarantee is one of the most effective ways to create customer confidence. First, it removes the financial risk involved in the customer’s purchase. But beyond that, it shows your customers that you’re confident in the quality of your product – and you’re confident they will be satisfied with a membership to your site.

To set up an effective money-back guarantee, you’ll first want to decide on a specific time period during which your customers can request (and receive) their money back from a membership purchase.

During this predetermined period of time, make it clear to your customers that they can receive a refund of their membership fees with no questions asked.

A good example of an effective money-back guarantee is one that applies to new members any time within the first 30 days after initial sign-up.

Choose Your Battles Wisely

When you’re trying to decide on the specific terms of your membership refund policy, it’s helpful to consider:

• How you plan on conducting your business
• How you want to interact with your paying members
• How online customer reviews will help or hinder your membership program
• What you ong-term revenue and brand image goals will be

Do you really want to put a lot of effort into trying to reverse refund requests? Would that be the best use of your energy and time?

If you want to land in the category of successful membership website owners, you’ll learn that it’s best to focus on the positive aspects of running your business. Rather than battle against refund requests, keep your focus on creating great content and keeping your loyal members happy.

Often, a negative interaction with a member (no matter how justified you think it may be) will cause a lot of problems in the long run. Perhaps you are correct to defend a decision to refuse a customer refund. But is it worth the damage that may ensue from a highly dissatisfied customer who blasts negative reviews about you all over Google and social media?

In today’s market, the average person has become a lot more tech-savvy than in the past. And people are often willing to go to great lengths to protect their own money, even in cases where they know they made a mistake.

For example, if a dissatisfied customer decides to open an official Stripe or PayPal dispute against you, it will often end up costing you more than issuing a simple refund. And, in most cases, online payment processors such as Stripe and PayPal end up siding with the customer over the vendor.

When this happens, the conflict can damage your account standing with your payment processors. And if too many disputes are filed against you, you’ll end up with major problems that have the potential of impacting your entire operation.

Of course, there are exceptions to every rule. There will be times when denying a customer refund is completely justified and you should stand your ground.

Some examples of when you should consider refusing membership refund requests include:

• A customer signs up for your membership site, downloads all of your premium content in the first 24 hours, then immediately emails you asking for a refund
• A customer signs up, then is completely inactive for the first few months of membership. After several months have passed, they decide they should be refunded for the entire length of the membership they chose not to use
• A customer becomes a member of your site, then shares their exclusive login details with friends or family members. You can easily prove this because their login records show active sessions in multiple states or countries at the same time

Conversely, here are some common scenarios when you will probably want to issue a refund (and choose your battle for another day):

• Your customer request a refund within the refund or money back guarantee timeframe
• The customer reached out to you for assistance, but you weren’t able to resolve their issue prior to them requesting a refund
• A customer signs up for your membership program, didn’t download or access any content for an entire month, then requested a refund when they finally had time to review your material for the first time
• Your customer simply isn’t happy with the membership for any valid reason 

For those times when you do decide to issue a customer refund, it’s a good idea to allow customers to use their membership until their next renewal date arrives. Offer them this opportunity, even if they request a hard cancellation.

If you’re using the best WordPress membership plugin, Restrict Content Pro, you can also prorate membership dues with ease. In fact, issuing refunds with Restrict Content Pro can be done in only a few clicks. 

If you’re not sure exactly how to layout your membership refund policy, take a look at how other membership sites in your niche handle refunds. Often, it’s been to learn by emulating someone who has already found success.

Keep Your Membership Refund Policy as Simple as Possible

If you’ve decided that you will offer refunds in certain situations, it’s important to keep your policy as simple as possible. Even though receiving a refund request might ruin your morning, you don’t want to make the process so difficult that customers aren’t able to complete the process.

Keeping your membership refund policy as simple as possible is key.

For example, you want to make it easy for members to find the refund request form or website page. Of course, you don’t want to openly market your refund policy at the center of your site (there’s no need to encourage refunds). But don’t hide it away or make it impossible to find, either.

Learn Something From Every Refund Request

Is there an obvious reason why you’re getting more refund requests than usual? 

Are an abnormal number of requests coming in for similar reasons? 

A few refund requests each month is normal for an active membership site. But if you’re getting an unusual number of them, it might be time to take a look at the quality of your new content or your site layout. 

What can you improve? Is there a common traffic source that’s producing members who cancel? 

Is there something that’s not working?

Refund requests can teach you a lot. Sure, there will be scenarios where the customer is hasty, or even irresponsible. But, you’ll likely find that most requests are coming from brand new members who, for some reason, aren’t quite satisfied with your membership.

It’s important to figure out why.

Focus On the Long Game and You’ll Find Success

In nearly every business scenario, a short-term loss is worth the long-term gain of building a brand that is known for exceptional customer service and positive experiences. 

And often, members who cancel their memberships return later to continue on their journey with you. But even if they don’t, they’ll appreciate a helpful refund experience enough to retain a positive view of your company (potentially even supporting future products or projects).

It can be tempting to dispute every refund request or try to talk members out of canceling. In fact, it can feel pretty upsetting when a member reaches out and demands a refund. 

But remember, memberships thrive on long-term member retention. As long as your member numbers aren’t dropping sharply or consistently, a few refunds here and there won’t stop you from achieving success with your membership site.

Restrict Content Pro Makes It Easy

Of course, success also depends on the tools you use for running your membership site. For WordPress site owners, there is no better tool for creating and managing a membership site than the Restrict Content Pro plugin.

Restrict Content Pro will turn any WordPress site into a fully functioning membership site, with no coding knowledge required.

And when it’s time to issue those dreaded refunds, it’ll be as painless as possible.