A no-refund policy causes more satisfaction in any category
If you thought that being flexible with clients in your agreements with them and allowing them time to opt out of working with you is a star customer service tactic, you couldn’t be more wrong. Listen to this research at Harvard University that proved this point.
The Unanticipated Joy Of Being Totally Stuck
Dan Gilbert, author of “Stumbling on Happiness” talks about an experiment he did at Harvard. In his TED talk (minute 15:00 mark), he talks about an experiment where students of a photography class were asked to create 2 pictures. Then they were asked to relinquish one of them to send to “head office”, a bogus story made up to measure the dissatisfaction of giving up a treasured creation. One group of students were given 4 days to change their choice of which picture they relinquished. The other group were told that the mail was going out immediately and with no chance of ever seeing the relinquished picture again. The two groups of students were then asked to rate their satisfaction with their choice of the picture they kept. Surprisingly, the group that had to decide right away had both higher initial and successive (5 days after the swap) rates of reported satisfaction. The group that was given the 4 day opt-out option had lower initial and successive satisfaction scores. The group that was stuck with their choice were astonishingly happier about their forced choice.
Are Happy Clients Successful Clients?
In my coaching practice, I have a very strong contract for my 6 month programs that outlines in several places that there is no refund after the agreement has been signed. This is regardless of whether I terminate the contract or if the client terminates. Prior to having this contract, I used to do a monthly commitment with a money back guarantee and unsurprisingly had most of my clients bailing out of the program, even though my rates were a quarter of what they are today. Hearing the research really made sense and a lightbulb went on in my head, clients who are not given a choice in whether they can drop out of the program or not end up actually doing better because they are HAPPIER with my coaching. Just like in the research, clients who had previously had the option of leaving the program were less happy because it’s basic scientific fact that humans with less choice MAKE themselves happier about the choice. And when clients don’t drop out of the coaching, they get results.
Taking Away Choice As A Tool For Success
A previous research that Dan talks about showed that 66% of humans, given the choice, would choose a reversible decision but ironically the happiest people with their decision are those who didn’t have the ability to reverse them.
So think about your business and what choices you’re giving to your clients. Are you giving them choice about programs, payment plans, engagement lengths? How is that affecting them in the long run? Are you taking their success away from them by giving them too much choice?
If you structure your business based on the basic human insight that while clients crave reversible choices, they are happiest with irreversible ones, what is possible for you?
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Chala –
Your article is right on point and I thank you for letting folks know. In my 12 years coaching coaches and other business owners, I’ve found this to be true. And, new business owners really hesitate to come from this place of empowerment.
Denise Hedges