Your company should do everything it can to keep a loyal customer. It costs five times as much to attract a new customer than to keep an existing one. Not to mention, the probability of selling to an existing customer is 60-70%, where selling to a new customer is 5-20%. Obviously, retaining loyal customers should be a priority for merchants. In this post, we will go over how proper dispute management can positively impact customer satisfaction and retention.
How Can Proper Dispute Management Increase Customer Satisfaction
Before we get into customer satisfaction, let's run through the dispute process.
- A customer contacts their issuing bank to dispute a charge
- If the issuing bank views the cardholder claims as valid, they issue the dispute
- The merchant receives the dispute and has the money from the disputed transaction taken from their merchant account
- Merchants can accept the dispute or respond to the dispute with a response document
- If merchant responds to the dispute and the cardholder's claims were invalid, the merchant will regain the transaction amount
Now that we have the dispute process laid out let's get into how merchants can use this process to increase customer satisfaction.
Real-time Resolution (VMPI)
Real-time Resolution (RTR) in the Chargeback App enrolls merchants in Visa Merchant Purchase Inquiry (VMPI)—allowing for real-time communication of customer, order, and product details to the cardholder's issuing bank. RTR allows the issuing bank's dispute analyst to use transaction details to decide if the dispute is invalid and prevent it from being filed. In cases of friendly fraud, the additional data helps jog the cardholder's memory about the purchase. And in cases where the cardholder is trying to intentionally misuse their chargeback rights, the extra layer of confirmation acts as a critical deterrent from proceeding with the dispute.
For example, a cardholder makes a purchase through ABC company. By the time the cardholder is looking over their statement, they forgot what they purchased from ABC. They start to panic, thinking the charge is fraudulent, or ABC is trying to charge them for something they didn't buy. There are only negative feelings associated with ABC's brand as the cardholder reaches out to their issuing bank to dispute the charge. Luckily, ABC has Real-time Resolution. When the cardholder is on the phone with their bank, the representative can explain the product description of what was purchased and other details to help jog the cardholder's memory. The frustration with ABC subsided as the cardholder realized what they purchased. Not only did RTR stop an invalid dispute, but it also mended an otherwise broken customer relationship.
Real-time Resolution is an extension of your customer service efforts. Similar to how your customer service is active on live chat, social media, email, or call center trying to give your customers the best experience possible, RTR brings your customer service to another channel. This channel of customer service is even more powerful because the customers that go to their issuing bank first are bypassing the merchant's traditional customer service efforts.
Repair Relationships After Disputes
RTR works for friendly fraud and chargeback fraud disputes. These disputes are invalid disputes, which means the merchant is not at fault because the cardholder made a legitimate purchase. But for disputes that the merchant is at fault, it requires extra effort to mend the relationship.
Merchants can engage with customers after a dispute by first looking at the reason code. When your company receives the dispute, it will have a reason code attached to it that explains why the dispute was filed. The reason code can help point you in the direction of how to reach out to your customer.
For example, you receive a dispute and the reason code explains that the package was never received. You look into the case and find that there was a mistake in your logistics department. In this situation, you could email the customer and apologize that they never received their package and offer to replace the item or offer a discount if they would like to reorder. Even a simple apology email can go a long way to keep a customer happy.
Why Dispute Management is so Important
If the dispute process at your company is not managed correctly, it can cost you in customer relationships, revenue, dispute fee, and labor cost. By taking the time to set up the correct processes surrounding disputes, it can not only create a better customer experience but also increase revenue and stop fraud loss. To learn more about how RTR and automated dispute management can help your company, you can schedule a demo with one of our dispute experts.