
How we reduced chargebacks by 30% (as a percentage of sales) - brm
http://www.37signals.com/svn/posts/1545-how-we-reduced-chargebacks-by-30-as-a-percentage-of-sales
======
staunch
I think some gateway APIs let you set the descriptor on a per transaction
basis. That seems like the ideal solution.

Probably the _most_ effective way to reduce mistaken chargebacks would be to
let the _user_ specify part of the descriptor. They could say "Ask Peter" or
something, so if the accounting department didn't recognize it they would ask
Peter or "Ask IT" or whatever.

~~~
anthonyrubin
Being able to add a PO number to the description would probably help at many
companies.

~~~
antiismist
This would absolutely help many companies.

I saw this first hand at a company that I worked for. For accounting, you take
the receipt and file an expense report. That goes into quickbooks. Then you
get the credit card statement and have to go line by line and match it up with
the items that were expended. It would consume many hours each month.

------
kyro
I get very uneasy when I see a '-' in a url. Something really spammy about it.
I'd be inclined to just cancel the transaction on seeing that url.

It's like watching a commercial for eMusic or something and seeing their site
advertised with an arbitrary number in front of the service's name, like
73emusic.com. That url doesn't really exist, but I've seen it a bunch of times
before.

~~~
amobilebiz
I couldn't agree with you more. There was a comment posted on the blog about
why they didn't go with charge.37signals.com instead. I would think this would
be better since it contains the real domain. I too am curious why they didn't
use the subdomain route.

~~~
anthonyrubin
I think the problem with a domain like charge.37signals.com is that many users
don't understand how to type it in the address box (e.g. some will add www
before it). If you've watched users try to enter URLs with subdomains in the
address box you've likely experienced this.

~~~
amobilebiz
Good point, I didn't even think of that and it is true. One option would be to
add a CNAME entry for the www portion on the subdomain. That way if someone
did it would route correctly.

------
anuraggoel
A good example of thinking outside the box. I didn't think customers who were
charging back "37signals" would actually take the trouble of going to
"37signals-charge.com", but I guess the numbers prove me wrong.

However, the 30% reduction is 'as a percentage of sales'. Since their sales
grew in 2008, maybe more sales, more '37signals' specific marketing, and the
fact that they've been around a year longer meant more awareness of the
'37signals' brand, which directly led to fewer chargebacks?

~~~
there
that's assuming that most of their chargebacks were simply because people
didn't recognize the charge. how many were because they didn't like the
service, didn't get support, or some other reason?

with most credit cards, you don't really need to have a good reason to do a
chargeback. especially with american express, they side with the customer
rather than the vendor.

american express sent me some paperwork when i signed up for a merchant
account and it basically said when a customer does a chargeback, they refund
the money immediately and i would have little or no recourse to debate it.

~~~
anuraggoel
If people didn't like their service, wouldn't most of them ask for a refund
(which would not be classified as a chargeback)? I believe chargebacks are
usually intended for charges that the customer thinks are fraudulent.

~~~
there
a refund would have to go through 37signals, and they don't give refunds
(<http://www.37signals.com/refund>). a chargeback just avoids the middleman
and gets the customer his money back.

~~~
petercooper
A lot of companies say they have no refund policy in public, but will refund
if a customer complains enough or threatens a chargeback (just because it's so
annoying to deal with).

A company like 37signals needs to say they don't give refunds to deflect
complaints regarding if you close your account half way through a month.. "Why
don't we get half this month's payment back?" etc, which would be an
administrative nightmare.

~~~
boredguy8
If prorating your service is an "administrative nightmare" you have issues.

------
aneesh
It's also worth noting that if you process payments at large scale, you might
also have some fraud-related chargebacks. No matter how you customize the
descriptor, you can't completely eliminate those, because the person receiving
the bill actually didn't buy the product.

~~~
cedsav
true, but when doing SaaS it's less of a problem since you can just shut down
or downgrade the account.

------
Herring
Sounds like a branding problem. Why have "37signals" at all if people don't
recognize it?

~~~
teej
Their charge explanation page (<http://37signals.com/charge>) looks semi-
targeted at whoever pays the bills, who isn't necessarily the person who
purchased or uses the product.

