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How to Improve Customer Service So You Can Avoid Chargebacks

Jessica Velasco | Friday, February 16th, 2024 | 11 minutes

Chargeback prevention can be thought of as a really intense competition. Who offers the best customer service? You or the customer’s bank? If you are interested in avoiding chargebacks, you have to win that battle over and over again.

Here’s what you need to be victorious.


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Reach out after the merchandise has been delivered or the services rendered.

Only 1 out of 26 unhappy customers complain.

In a perfect world, you would know when a customer is upset. The two of you could work together to find a mutually-satisfying solution. Then, the customer would consider the problem solved and wouldn’t have to resort to a chargeback.

But, unfortunately, the reality is usually much different. Research has found that you will rarely know when there is a problem. Less than 4% of dissatisfied customers contact you directly to resolve an issue.

If you want to avoid chargebacks, you’ll need to be proactive about conflict resolution. If you reach out and customers aren’t satisfied, there is a chance they’ll speak up when given the opportunity. But if you don’t ask, they may never say anything.

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Make sure your team is knowledgeable and empowered to resolve issues.

89% of customers get frustrated if the first person they talk to can’t solve their problems.

If customers do make an effort to reach out when they have concerns, you want the experience to be as satisfying as possible.

When asked what makes for good customer service, 66% of adults said valuing their time was the most important thing the company could do.

This means you’ll want to make sure your customer service team is well educated on the company’s policies and procedures so employees immediately know the appropriate action to take in any given situation.

Also, empower your ground-level employees to make decisions themselves so they aren’t constantly escalating issues to get manager approval in real time. If customers think they are getting the run-around, they’ll get frustrated, bail, and turn to the bank instead.

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3. Have a system in place to document the entire customer experience.

9 out of 10 customers appreciate it when the customer service representative already knows their account history.

This tip builds off the previous: the more efficient your customer service, the better.

Customers don’t want to take the time to explain their order history, credit card statements, or past conversations every time they contact you. They expect your team to talk amongst yourselves, share information, and make sure everyone is on the same page.

Not only does this tip help with preventing chargebacks by minimizing customer frustration, it also ensures you can use issuer-merchant collaboration tools like Order Validation if the customer does try to dispute the purchase with the bank.

If you keep accurate records of the entire customer experience and have a way to quickly access the information, you can share your insight if the customer’s bank reaches out for clarification. This could prevent a dispute from turning into a chargeback.

Use a high-quality CRM (customer relationship management) platform, and create standard operating procedures for documentation. Then, integrate with Order Validation to start sharing this valuable information to drive customer satisfaction and prevent chargebacks.

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4. Be friendly and accommodating.

73% of customers say a friendly customer service representative can make them fall in love with a brand.

If customers feel appreciated and see value in your goods or services, they’re usually more willing to overlook your shortcomings. And a loyal, forgiving customer is less likely to resort to a chargeback.

One way to show appreciation and respect to your customers is to employ friendly, personable, empathetic customer service representatives. You have a genuine interest in resolving disputes before they become chargebacks — show it!

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5. Make it easy for customers to solve problems themselves.

50% of customers think it’s important to solve product or service issues themselves.

Most consumers have come to expect instant gratification for just about everything. And a lot of times, that means solving problems themselves instead of waiting for someone to help.

Consider investing in self-service tools such as an online portal for great customer service, live chat, a mobile app, or voice response system. Eight out of the US’s top 11 issuing banks allow cardholders to dispute a purchase with just a click of a button. If you want to avoid chargebacks, you need a self-service option too.

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6. Admit when you’ve made a mistake.

9 out of 10 customers are willing to offer a second chance after a bad experience if the company has a history of transparency.

The more honest you are, the more your customers will respect you.

Nearly 70% of customers said their opinion of a brand improved if they received proactive customer service notifications.

If something goes wrong, admit it. Don’t make excuses or try to hide the truth. If you tell customers about a problem — instead of letting them discover it themselves — and offer a solution, you have a much better chance of avoiding chargebacks.

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7. When you receive a bad online review, don’t ignore it. Respond.

79% of customers who shared a complaint online had their comment ignored.

Just because someone posts a bad review online doesn’t mean the customer is lost forever.

In fact, only 33% of customers said they would think about switching brands after a bad experience.

If you work to solve the problem, even after the customer has made it publicly known, there’s still a chance to prevent the chargeback and retain the customer. Don’t give up!

Responding might help you avoid the upset customer’s chargeback, and as an added bonus, commenting publicly also helps reduce the risk of future actions driving up chargeback rates.

Ninety percent of customers read online reviews before visiting a business. A bad review could cause someone to have a negative opinion of your business before they even start shopping. But the negative impact should be lessened if it’s obvious you are actively trying to improve and build customer loyalty.

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8. Ask for positive reviews.

79% of online shoppers said they trust online reviews as much as personal recommendations.

If your business has some bad online reviews, you’ll want to counter those with positive ones.

However, customers aren’t as likely to provide positive reviews as they are negative: 95% of customers tell someone else about a bad customer service experience, but only 87% share about a good experience.

Therefore, you’ll want to be proactive. Ask your satisfied and loyal customers to provide feedback.

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9. Don’t take bad reviews or chargebacks personally.

50% of customers naturally churn every five years.

The more loyal your customers, the less likely they are to file chargebacks. However, earning and retaining that respect can be challenging.

Nearly 40% of customers say it can take five or more purchases for them to consider themselves loyal to the brand. Even if they do eventually become loyal, the attachment probably won’t last forever.

If a customer files a chargeback or makes unflattering comments online, don’t panic and invest more effort than the customer is worth. Instead, focus on the customers who are loyal and show signs of staying that way.

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10. Be active on social media.

Churn can increase by 15% if social media comments are ignored.

Your social media accounts should be managed by two teams: marketing and customer service.

If marketing is the only voice for your company, it’s easy for social media to become a one-way conversation.

Treat social media like any other line of communication. Make sure customer service representatives are responding quickly, accurately, and professionally.

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11. Embrace modern communication methods, but don’t retire email or phone.

For complicated issues, like a payment dispute, 40% of customers want to talk to a real person over the phone.

Self-service tools and social media can be great additions to an excellent customer service strategy, but they shouldn’t replace more traditional methods of communication like phone and email.

Email is the most common digital communication method for customer service issues, used by 54% of customers. It will be a while until more modern techniques, such as social media, apps, and self-service portals, catch up.

So, experiment with new options to improve customer service, but don’t minimize or completely get rid of the tried-and-true channels.


Want Help Optimizing Your Customer Service & Avoiding Chargebacks?

Chargeback prevention is a complex task. There are lots of things to take into consideration. Optimizing your customer service strategy is an important part, but it is just one small piece of a bigger puzzle.

Our chargeback management experts can help you create a comprehensive plan to reduce chargeback ratios with greater success and efficiency. Check out our chargeback management solutions to learn more.

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AUTHOR

Jessica Velasco

Content Manager for Marketing

For nearly a decade, Jessica Velasco has been a thought leader in the payment dispute industry. She aims to provide readers with valuable, easy-to-understand resources.

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