As consumers continue to exercise the power of choice when selecting service providers, staying competitive means transforming every detail of the customer experience into a winning advantage. Surprisingly, that includes how you handle refunds.
More than just part of doing business, utility refunds factor strongly into customers’ feelings about your brand. Not all customers are owed a refund because they switched providers; overpayment — such as on escrow accounts and auto loans — is also a common scenario. And according to the Wirecard 2019 credit balance refund survey, Destination: Digital Refund, nearly 64% of consumers found the refund experience “important” or “very important” to their perception of a provider’s customer service. Customers who were happy with their refund experience were likely to leave a positive review or tell friends, family, and coworkers.
Public praise for your services — even from an exiting customer — is always good news. But better refunds benefit utility providers even more directly. Today’s evolving customer loyalty landscape means customers who leave to try a competitor’s service often switch back, down the road. Our survey found that 61% of customers have returned to a former provider.
While many factors are involved in the decision, like price and moving out of a provider’s service area, the exiting experience plays a role. For 82% of respondents, the credit balance refund was “somewhat,” “very,” or “extremely” important in the choice to go back. When customers experience a timely, efficient payment that reinforces trust in your brand, they leave with a positive impression that may influence a future decision to switch providers.
Why customers prefer digital refunds
Building a better refund offers clear benefits both for customers and for service providers hoping to drive winback and positive social sharing. But what does a better refund look like? For 48% of customers, a positive payment experience was decidedly digital.
That category includes an option embraced across a variety of industries and use cases: digital, open-loop cards. Whether virtual or physical, open-loop cards function similarly to debit cards. Customers are free to spend them like cash, with added benefits that include security and the ability to add the card to a mobile wallet for easy shopping.
And while not every survey respondent explicitly preferred digital refunds, many wanted a particular benefit that digital payments excel at delivering: speed. 76% of consumers expected to receive their refunds within a week or less, and 13% wanted to be paid in no more than a day. Only digital payments have the potential to meet this range of customer expectations, 100% of the time. What’s more, customers who prefer legacypayment methods, like checks, can still have their choice. By migrating refunds to a digital platform, utility providers offer customers an expanded range of options — including choices they may not have previously considered.
Why utility providers prefer digital refunds
Digital payments offer a unique set of benefits for businesses. That includes data on customer behavior and preferences, which can help providers refine their marketing models and drive winback. Issuing payments on open-loop cards will also reduce expense and hassle on the back-end, by streamlining customer service and escheatment reporting.
According to our survey, over 9% of customers said they’d had a refund sent to the wrong address. 18% said they’d had the experience of never receiving refunds they were owed. Digital refunds eliminate these issues, since the payments follow individual customers, not their physical locations, and are easily tracked on the back end. That all but eliminates the administrative burden for providers.
The simplest benefit of digital payments is also the biggest: they are the most cost-efficient choice, offering a significantly reduced cost per payment when compared with checks. And, they offer additional opportunities to drive revenue by better understanding customer preferences. Businesses can even turn refund payments from a cost center to a profit center, by engaging in revenue sharing when customers spend their refunds.
In summary, streamlining and digitizing your customer refunds provides an unexpected opportunity. Getting the details right means embracing a changing portrait of today’s customers. They are ready to experience the advantages of going digital and will reward companies who deliver on their preferences for faster, more convenient payments.
To learn more about the credit balance refunds landscape and how to deliver on customer preferences, get your copy of the Wirecard 2019 credit balance refund report, Destination: Digital Refund.