How to prevent chargebacks:
Subscription - have a clear opt-in, send pre-renewal notification(s) with cancellation instructions
Dropshipping - send a shipping update email every 3-4 days until the item is delivered
Product unacceptable - do better 🥲
3 underrated opportunities in the DTC space:
1. Pay TikTok creators $15-50 per video to create organic videos. Once you find something that works, quadruple down across all accounts.
2. Open an app for your brand.
3. Open a Discord or Facebook group for customers.
How most brands handle chargebacks:
• Ask their CS reps to do them
• Never check results
• Lose 85% of the time
How our merchants handle chargebacks:
• They don’t
• We do it for them
• Completely hands-off
• Only pay when we win (which we normally do)
200 IQ hack to get more UGC
Put a packing slip in your orders similar to this. Send people to a page built on with instructions/example for the UGC you want.
This gets a 30-50% submission rate if done properly.
Unlimited, Automated UGC 🤑
Our pricing is simple.
We answer your chargebacks.
ONLY if we win a chargeback do you pay.
We take a small % of what we win back for you.
It's literally not possible to lose money working with us.
The way software should be.
More and more e-commerce folks are getting screwed by Stripe.
Use this “Stay-Safe Checklist” to make sure you’re not gonna be one of them (bookmark this):
If your dispute rate is too high, just get yourself chargeback alerts to refund the customers pre-dispute.
It’s not worth the risk of getting your funds put on hold.
You can drive the dispute rate down by almost 90% with this strategy.
Imagine ordering something online only to be refunded right away for no reason.
That’s what happens to your customers if you trust the Shopify’s fraud analysis system.
Shoplifting has evolved
Now you can shoplift an ENTIRE KITCHEN
With no negative repercussions or serious consequences
Don’t let people with no morals harm your business
use
@disputifier
(unless you sell kitchen installations we don't do that)
Unethical ways to make money part 1:
1. Order stuff online
2. Issue a chargeback right after
3. Get your money back and sell the products online
Today’s episode was sponsored by all ecom founders who don’t fight chargebacks.
Say your AOV is $60, your gross margin is 75% and you average 2X ROAS
Then a customer issues a chargeback
Costs:
• $60 refund
• $30 ad spend
• $15 Shopify fee
• $15 product cost
+ Some more
$120 in expenses
One chargeback nullifies your profit from 8 sales
Crazy huh?
Did you know?
Only around 35% of "high risk" orders Shopify flags ever turn into chargebacks
If you're refunding all high risk orders...
The MAJORITY are real customers
If your customer service team is answering your chargebacks and PayPal disputes, you're not alone
BUT you are losing $$$
We've helped hundreds of brands move their customer service team back to their ACTUAL job
and in doing so...
double or even TRIPLE their win rate
What’s cheaper than a processor holding 15% of your revenue for eternity?
Paying a small fee to block your chargebacks, essentially preventing all payment holds completely
If only this existed…
oh wait.
it does
It only takes a few days of frozen funds to bankrupt a successful ecom brand.
And trust me, everyone who’s scaled to 7 or 8 figures has experienced a few sleepless nights from having this happened to them.
Don’t rely on just one payment processor.
.75% chargeback rate is the unwritten limit for staying safe on Stripe.
Anything over that is just you asking to have your funds put on hold.
Your best options:
- Switch to a different processor
- Get chargeback alerts in place and block 90% of chargebacks
Ideally both.
Say these are your stats:
• $300K/mo in rev
• $70 AOV
• 1.2% chargeback rate
• 20% chargeback win rate
You’d lose over $82K a year because of chargebacks and all associated costs.
Crazy, right? If only there was a solution…
Why do payment processors put your money on hold?
Because they have trust issues.
If you get too many chargebacks, the processor may become liable and lose money.
The best way to prevent holds is to prevent chargebacks.
And the best way to prevent chargebacks is with alerts.
Did you know that 70-90% of chargebacks can be BLOCKED?
How?
Chargeback alerts.
Chargeback alerts are "alerts" sold to enterprises by Visa & Mastercard, allowing us to be notified about a chargeback before your processor is.
This allows us to refund & "block" the chargeback!
Many customers experience buyer’s remorse after impulse buying on BFCM
Rather than returning the item, they initiate a chargeback with their bank.
So be ready.
Or hire us.
Because we're always ready.
What works for an ecom brand in 2022:
High LTV ($200+)
High gross margin (70%+)
Investing in organic channels
What does NOT work for an ecom brand in 2022:
Not differentiating your product/brand
Scaling with 20+ day shipping
Not investing in retention
DTC marketing evolution:
2020: TikTok organic
2021: UGC + TikTok Ads
2022: IG + YT short-form content
2023: TikTok Shop
2024: AI ads
What’s the next big thing in DTC?
2) Gamified Checkout
This one works especially well for female-oriented brands.
Just create a game-like feature at checkout where customers can "spin a wheel" or play a quick game to win an additional discount or a freebie if they increase their order value.
High chargeback rates are the most common reason for having your funds held by your payment processor.
However, most chargebacks can be blocked through something called “chargeback alerts”
This is how it works:
So if you only keep 10%
And your .5% chargebacks cause 1.2% of total losses
Then you just lost 12% of your income.
It’s very easy to ignore chargebacks but they’re silently devouring your net profit.
@SeanEcom
over 50% of voters saying they have a .5% chargeback rate or higher
wow.
this is where you start to run into reserves, holds, and terminations
just use chargeback alerts to reduce your ratios by 70-90%
Now more than ever it’s important to have a strong AOV-boosting backend in place.
Here are the top 5 AOV-boosting tactics that most people don’t know about:
42% of Gen Z have admitted to ’scam’ companies by attempting friendly fraud.
But that’s just the ones who admitted it, the real number of Gen Z population who has ever committed friendly fraud will likely be a lot higher.
Make sure you have the tools in place to fight back.