Remember how there was so much ado about chargebacks not but 60 days ago? There were quite a few companies scared that the cancelation of events would cause participants to mobilize into a chargeback frenzy - like the Running of the Brides at Filene's basement, but in reverse. Like a Niagara Falls of credit card reversals. Like a.... well, you get my point.
You may not know this, but the amount of chargebacks issued during this pandemic is, on average, about 900% higher than what is received in "normal times".
900% sounds like a lot. I know.
In this case, it’s not.
I never wrote anything about the so-called chargeback scare because, frankly, I thought it was probably overhyped and not accurate. (It is also why we at EnMotive/imATHLETE never created an overall policy to hold back money from events.)
It turns out that I was right. The belief that masses of participants would freak out and cause a torrential chargeback downpour ended up to be more of a dribble. It was less Niagara Falls and more leaky kitchen sink.
There is a very specific reason for this. And I'm going to tell you what it is. But first, let me give you some real numbers to illustrate my point.
With the 900% increase during the pandemic, we’re now averaging about 9 chargebacks per day. (Editor's Note: It is our understanding that other reg companies have about the same proportional increase.)
If you count all of the chargebacks we received in 2020, it still represents meaningfully less than .05% of our overall transactions. In other words, it's a minuscule amount.
Even more, during these unique pandemic times, we are still winning ~75% of the chargeback claims. In other words, with the way we dispute chargebacks for canceled events, more times than not, the participant is not receiving the refund. We are successfully representing the voice of you, the event owner.
There's an important part of my numbers that I haven't mentioned yet. It's that nearly seventy percent of all of our pandemic-era chargebacks come from one specific event.
That's right. Seventy percent. All from one event.
(Another Editor’s Note: We’re not going to mention the event name, let's just call them "Event X". Frankly, we think the event organizers were victim to circumstance and were pressured into behavior by outside forces who didn’t appear to understand - or care about - participant feelings.)
Event X canceled this year, probably like yours. Event X offered a variety of very fair options to their participants. Again, probably similar to yours. In fact, Event X's offering was even more than many other event offerings - theirs included a partial refund option.
You're probably now asking yourself, "why the heck then are they getting so many chargebacks?"
Well I'm glad you asked.
Today's cancellation window for events is 30 to 90 days. In other words, events that are cancelling are doing it between 30 and 90 days prior to event day.
As we sit here in mid-May, all May events have been canceled. Most June events have also been cancelled and July is falling pretty quickly.
Event X, on the other hand, didn't announce their cancellation until after their official event date occurred. Say the event was hypothetically scheduled for May 13th (which it wasn’t), they hypothetically announced their cancellation on May 16th.
Prior to that, they were only able to get out two emails over the months leading up to the cancellation. Both of the emails, which were heavily edited by people who shouldn’t have edited them, essentially said “we’re working on a solution and should have more info soon”.
People don't like surprises that bring bad news. Bad news surprises are... well, bad.
If a surprise is brewing and you leave guesswork to the masses, there is rarely an instance in which it will work in your favor. In the absence of facts, people always assume the worst and then will often get angry at you regardless of the eventual outcome.
We received 11 new chargebacks this morning. Ten of them were for Event X. Even though the announcement has been made, even though a fair offering has been presented, participants are still angry.
From the participants perspective, they saw nothing happening with Event X that made it seem like the organizers were acting in the best interest of the participants. So people assumed the worst, felt like they were being cheated and many filed chargebacks.
This takes us right back to the fear of the chargeback frenzy that we talked about up there at the top of this piece. Those people who feared that there would be a mass of charge reversals didn't necessarily understand what chargebacks represent. In fact, many people in general tend to get it wrong.
If you've been reading what I've written over the past months, I hope by now you’ve come to realize it’s not necessarily what you do that will make participants angry, but rather how you do it.
Yes, chargebacks, in general, are an accurate reflection of the level of consumer anger in the market. The more chargebacks, the more anger. The faulty logic, however, is believing that chargebacks are a reflection of what is being done (e.g. events being cancelled). That is far from the truth.
People don't tend to get angry from a store closing, an event cancelling, a company dissolving. They get disappointed, yes. Saddened, sure. Disheartened, maybe. They only really get angry if the action was done to make the person feel like they were personally cheated.
Chargebacks - and negative consumer opinion in general - have little to do with the cancelation/closing/dissolution. Instead, they are reflection of how the leaders communicated with their consumers. What is said and how it is said is much more important than what is done.
The amount of chargebacks are less of a reflection of the participant and more of a mirrored reflection of the event organizer.
Love it or hate it, agree with me or not, but the fact remains that people don't call their credit card company and reverse a charge if they're merely disappointed. They don't do it when they're sad. They don't do it when they wish there was a different reality. They do it when they're pissed off. They do it when they feel like they've been cheated.
Let me rephrase that because this is an important point...
Events giving partial refunds are getting no less chargebacks than those giving no refunds at all.
Participants are not getting angry and issuing chargebacks based on your actual offering when you cancel an event.
Instead, the amount of chargebacks you get is a reflection of your participants' belief in how you are communicating the offering with them.
If you just follow the basic rules of crisis communication, your participants won't feel cheated.
Transparency is everything when it comes to proper communication - especially in times of uncertainty.
As a leader, as a company owner, as an event organizer, as a marketer, as however the heck you want to describe your role, transparency and honesty are always the right option.
There is never a case where transparency and honesty won’t work out well in the end. If you’ve been honest and it’s not working out well, then, as they say, it’s not yet the end.
I'm hearing from a lot of Q3 and Q4 events who don't know what they should do. They don't know if they should keep registration open for the in-person or switch to a virtual event. They are acting like the virtual deer in the headlights.
Well, let me turn off the headlights and help you, dear deer. It's actually not even dark out. I will show you the light.
An in-person event and a virtual event are not mutually exclusive. Offering one does not mean you can't offer the other at the same time. More race directors than I care to imagine are surprised by that concept.
Virtual events aren't going away anytime soon.
None of us know for sure what will happen in the next few months, but we do know that, whatever happens, transparency and honesty will help you thrive.
So here's my suggestion for all of you with events in the future.
1. Keep your in-person registration open if there's even a remote chance it will happen.
2. Launch your virtual event now, alongside registration for the in-person.
3. Let people sign up for whichever option they want.
But that's not enough. That's not where the transparency ends. Step #4 is the critical one...
4. To be fully transparent and reduce your risk of participants feeling like they've been cheated, post details of what you expect your plans to be if you have to cancel. Post them so they are clear for every registrant and website visitor to see.
Show them you have a plan.
Show them that you're already looking out for their best interests.
Show them you know how to communicate in a way that makes them feel comfortable.
All it takes is something like this:
If we have to cancel we will inform you by August 31 and everybody registered for the in-person event will have the option of switching to virtual or deferring to one of the next two years. If we have the in-person event this year, virtual participants will have the option of upgrading to the in-person experience.
By simply doing that, you give people options, you eliminate their worry of what will happen, you eliminate all surprises in the future and you greatly reduce your stress out of the gate. Plus, you pretty much guarantee that you won't get (m)any chargebacks.
Learn the lessons from those who stumbled. Learn the lessons from those who thought the participants would begin to riot. They won't. The power is in your voice. Communication is up to you.
Don't wait until the future to begin your plans. Transparency begins with you. Transparency begins right now.