Notify customers about possible delays, and keep them happy.

by Neil Moncrief on May 26, 2009

I have a client who sells boats online- lots and lots of boats. He has drop-shipping arrangements with all his suppliers, so he maintains almost no inventory. Typically, his customers must wait at least 6 weeks for their boat AFTER they’ve paid for it. In fact, most of the boats he sells haven’t even been built at the time he sells them. Yet his chargeback rate is extremely low. How does he do it?

Generally speaking, credit card processors discourage merchants from billing customers before the merchandise has been delivered, or at least shipped. The reason is simple: Customers don’t like to see charges on their credit card statements for items they haven’t received. That leads to chargebacks and a high rate of chargeback losses.

So how does this client of mine manage to keep his chargebacks so low? And why does he win nearly every chargeback that is filed? He makes sure his customers understand his prepayment policy, and he has them agree to it in writing. He also goes to great lengths to stay in touch with his customers while they’re waiting. He calls to update them while their boats are in the factory, and he calls them again before shipping. Customers who have been informed of likely delays don’t get mad when delays occur. And happy customers don’t file chargebacks.

I’m happy to provide this information free of charge.  If you found it helpful, please subscribe to my RSS feed so you’ll be notified of future posts.  You can also follow me on Twitter, where I regularly post short tips.  I promise to never spam you or pressure you.  Please forward this to your friends in business, and feel free to rate my post or leave a comment so I’ll know how to improve. Thanks!

Leave a Comment

Previous post:

Next post: