Someone recently asked me why I encourage organizations to be thoughtful about refunds.

You should be thoughtful about refund policies because they can create tremendous goodwill and mitigate customer support efforts.

Especially when your product is digital and the variable costs approach 0.  For example, the other day, I accidentally hit “watch now” on a movie I had rented from Apple.  I told their support team and they gave me a refund.  Totally my fault, which I admitted, but they still gave me a refund because they recognized that I didn’t get any value from the product i had rented.

Amazon does this too, even with physical products.  I buy something every week from Amazon, have Prime and rarely complain.  A few months ago, I ordered a dress from one of the many international vendors that use the Amazon platform.  The dress was awful—cheaply made and tiny.  I tried to get the vendor to give me a refund.  Ultimately Amazon gave me the refund just to placate me.They told me to keep the dress, as it was easier for them than managing the return.

You need to be careful that no one customer is taking advantage, and it’s OK to let a customer go if they are (hence the “thoughtful” part) but too many organizations take a hard line on all refunds, and I think that’s a mistake, especially if you’re thinking about the long term relationship.