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The 1% Difference: Reducing Chargebacks 1

The 1% Difference: Reducing Chargebacks 1

July 4, 2003
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" Learn from your mistakes, ask for customer feedback and read through past support emails to plug any holes where people have had problems. "

It's easy to feel relaxed knowing 99% of your customers are happy. You win some you lose some, right? So 1 out of 100 customer’s have a complaint or can't remember what they did yesterday and charge back the transaction. That's ok, right? Not anymore. On October 1, 2003 under Visa's new chargeback regulations, that one out of a hundred has the potential to put you out of business.

On July 1, 2003 Visa presented an impending set of guidelines requiring Sponsored Merchants and IPSP's to tighten chargeback levels, dropping the acceptable rate from 2.5% to 1% for domestic transactions. Acceptable rates for foreign traffic have dropped one-half percent from 2.5% to 2.0%. What does this mean for webmasters? How can webmasters that are currently over the 1% level bring their ratio down before October 1st? How can webmasters that are currently within the acceptable limit take measures to prevent it from happening to them?

The 1% difference is all that separates success from failure for your online business. By taking steps towards reducing chargebacks and by making sure you are giving your customers a satisfactory experience, you can secure your position for long term success. Here’s a look at what you can control:

Customer Solutions
In previous articles over the years I have often reiterated that the most important part of building a successful adult website is by making the customer feel confident, respected, and in control when they visit your site. By relaying a message of security and discretion, as well as excitement and satisfaction, visitors become members who stay for very long periods of time. If they do choose to cancel, they can be confident that support links will be easy to find, allowing the site owner to once again, take care of his or her customers needs.

In every business transaction, online or off, there are elements of trust and satisfaction at the point of sale. The customer must trust that they are receiving a fair price for their purchase, buying what they came to get, and satisfied with their purchase or get their money back. By making sure you are offering a quality product or service as advertised you will be able to satisfy your customers to the fullest extent possible.

Advertising Solutions
Traditionally, you can control how your products and services are advertised. However, as a pay site owner, you can put up front-ends and instantly setup a reseller program to gather an army of webmasters who will promote for you – leaving you to keeping your site updated. But with every opportunity comes a liability. The more affiliates you gain, the more control you lose over how your site, free content you offer, and business in general is represented.

There is a reason why MasterCard does not want their logo displayed on adult sites or other non-approved places. They wish to retain control over how their name and their trademark is represented – you can’t just slap one anywhere. So why do you let your affiliates control the look and feel of your brand and the quality of your traffic?

One way to keep tabs on how your site is promoted is to search your domain name minus any extension (.com,.net,.cc) plus an illegal-content keyword in Google. If any affiliate is marketing your site, or any other site, content, or link on their domain they will show up in the rankings. You actually could use WebPosition Gold to search for all your affiliate’s domain names plus a few illegal keywords (like “Lolita” or “pedo” and more) and get a full report on who is ranking for what, and what page to target for any site that you do not wish to be represented on.

Software Solutions
There are several steps webmasters with referral programs can take towards better managing the quality of traffic they allow to hit their join forms. Geotargeting software is one helpful solution, and for webmasters who wish to filter their traffic independently of any sponsor program, GeoRedirect (http://GeoRedirect.com) is a formidable solution to consider. By filtering all incoming traffic by IP, language, country, etc you can limit what traffic you will allow through to your join form, or what traffic you wish to send to a sponsor program or relative payment option according to region where credit card fraud is likely high, or if chargeback resolution is difficult. For example, if your merchant service only provides credit card processing forms and customer support in certain languages, perhaps you may want to filter off the traffic from other countries to who ever you select, using the GeoRedirect program. This enables webmasters some leverage in knowing what countries you do credit card business with and which ones you refer to for a different payment option or sponsor program.

What else can you control? Well you know you’re going to need your 2257 compliance on your site and to make sure it's up to date, so start there. Read up on your credit card processing firm’s current Acceptable Use Policies and Contract Terms (dot your “i’s” and cross your “t’s”) to make sure you are in compliance with their expectations. Is there a way to track your day-to-day or month-to-month chargeback ratios? Find out so that you have a way to know when you approach a danger zone.

Let them know exactly when the next update will be, how many pictures will be added as a "here’s a sneak peek" in your tour or members area, keeping them happy for months on end. Learn from your mistakes, ask for customer feedback and read through past support emails to plug any holes where people have had problems. Did someone have a hard time finding that cancel button? Make sure that both support and email links are found from your main page to your member’s area. TELL YOUR CUSTOMERS exactly what they will receive for their money and make sure to back it up in your member’s area. Be specific; don’t try to sell “tons of blond pictures”– try “5,000 pics of only blonds” for exactly how much and under what terms.

Throw specials and get involved in your business. Have a “4th of July Sale” lowering your one monthly price “50% for a limited time” to encourage more monthly subscriptions over trials. Sell your wares, and don’t be afraid to make it exciting, just make sure it’s TRUE. If they signup at one rate make sure that if you change your price in the future, those members still pay what they agreed to. There is nothing more frustrating than finding “extras” on an invoice or bill.

No Hidden Fees
Most customers only want to do fair business. By respecting their wishes, and not forcing crossed checked sales you can earn their trust that will encourage repeated business plus longer periods of retention.

In Part 2 we’ll look at some of the things you can’t control…

Cynthia "Cyndalie" Fanshaw is the Vice President of Marketing for PSWBilling.com. An established expert in search engine marketing, Cyndalie has over 5 years experience in the Internet industry and working with webmasters. For more information about PSW Billing Services please visit http://www.PSWBilling.com or contact Cyn@PSWBilling.com


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