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A Podcast for Coaches shines a light on one of the most elegant, underrated business models in the world: one-on-one coaching. Mark Butler hosts the show, and he's been a coach and advisor to every kind of online business you can think of, having helped businesses earning everything from $0 to $25,000,000+. Although Mark believes every online business model has merit, he worries one-on-one coaching is viewed as a stepping-stone business for people who aren't ready or able to scale. But it's not true, and A Podcast for Coaches sets out to show people--through clear teaching and rich, current stories of successful coaches who love their business--that one-on-one coaching is one of the most gratifying and lowest "hassle-per-dollar" businesses in the world.
Speaker: Hey, this is Mark Butler, and
you're listening to a podcast for coaches
In a recent episode, we talked about
earnings claims that coaches make,
and I promised an episode about
refund policies, and here it is.
Today's thesis is that in our industry,
because of the way we as coaches tend
to think and tend to talk to each
other, it is widely accepted that in
many programs that coaches sell to each
other, especially those with the highest
prices, it is okay and even beneficial
to both seller and buyer to have a policy
against all refunds for all reasons.
Today I wanna make the case that
a sensible refund policy benefits
sellers as much as it benefits
buyers, and that a reasonable view
of refunds would solve some of our
industry's biggest image issues, would
solve the damage that can happen to
the brands of coaches who are doing
a lot of good work in the world and
would allow people to engage more
enthusiastically with more training,
more support in helping them build
the practice they have dreamt of.
If you're new here, I'm Mark Butler.
I've been in the coaching industry
actually since 2004, and I've
been supporting coaches as a CFO,
bookkeeper, and coach since 2014.
I have my own coaching practice where
my biggest focus right now is on
helping people have happier and more
connected relationships, , at home
and at work, and I continue to do
financial stuff for my fellow coaches,
which is one of the reasons that
I'm in a position to speak to this.
Because during the season where
I was acting as a sort of CFO for
coaches, I was inside many coaching
businesses that exceeded one
million dollars in annual revenue.
Now, that's a little bit of an
earnings claim, which I spoke
about in a recent episode.
But all I mean to tell you is I was
inside of coaching businesses and
coaching practices that saw a high volume
of transactions and a high volume of
large transactions, as in high-priced.
One of the things that view from the
inside gave me was data around refunds.
Not every business I worked in
had the same refund policy,.
My purpose today is not to indict or
certainly convict any of the coaches
I worked for in the past or any of the
coaches who are doing any of the things
we're talking about today right now.
That's not my goal.
My goal is to plant the idea that a new
view of refund policies in our industry
could actually make all of us better off.
So let me speak to what I believe to
be the problems with a absolutely no
refunds policy, how I think it stacks
the deck against the buyers, and how
it ends up hurting the sellers more
than they think it's helping them.
Let's start today by revisiting the
idea of asymmetry of information.
We talked about it in the
earnings claims episode.
It's just as relevant to
the refund policy episode.
What I mean by asymmetry of information
is the seller knows exactly what
their program is, not just the
features and benefits that are listed
on the sales page, but what it's
actually like to be in their program.
They have a better sense, if they are
willing to look with eyes wide open, of
what type of person with what type of
background and experience and network
and disposition and skills is more
likely to be successful in their program.
They know that ahead of time, but they
are often not as discerning as they
could be, or maybe they should be,
about who they enroll in their programs.
Now, sometimes coaches actually do
at least attempt a sort of ethical
filtering, I've seen sales pages that
say, "You can't apply for this program
unless you're already making X dollars or
unless you've had Y number of clients."
And sometimes they'll even time bind
those requirements, as in you have
to have made this many dollars within
the last three months or six months or
whatever, or you have to be currently
serving this number of clients.
I think that the average high-ticket
program seller is doing that because
they want to filter out those clients
who are least likely, in their
view, to succeed in their program.
But the filters don't work perfectly.
They work some, but they
don't work perfectly.
And the reason they can't work perfectly
is because how much money a person has
made in their coaching practice within a
given time is a good but incomplete signal
about where they actually are in their
practice and in their personal development
and in their demeanor and disposition.
So just because they've made a certain
amount of money doesn't mean they're
a good fit, and just because they
haven't made that amount of money
doesn't mean they're a bad fit.
So even when coaches put in place
these nice filters, and I do believe
they're well-intended filters, that
does not negate the benefit and even the
necessity of a sensible refund policy.
Because the seller knows based on
experience that there are people who
make it into the program that when push
comes to shove are just not a great fit.
And it is the ethical thing to
do to put that information up
front, and it just sounds like a
sensible, reasonable refund policy
It bothers me that a pure no-refund
policy refuses to acknowledge that
there are situations in which a person
crosses the threshold of the program,
and then would have a very good reason
for walking back out that same door
with their money in their pocket.
A no-refund policy leaves no room for
either the seller or the buyer to make
a mistake in the initial exchange.
That's kind of ridiculous a refund
policy becomes the insurance against
the imperfection of the sales
experience and the imperfection of
the fit between buyer and seller
Our industry has a tendency to put
all of the risk of fit onto the buyer,
it makes that bias official in the
form of having zero refund policies.
I don't think that's right, and I
don't think it's advantageous to
the sellers, just like I don't think
it's advantageous to the buyers.
There's too much psychology here
working against the buyer and stacking
the deck in favor of the seller.
In fact, I've outlined six
psychological factors, that skew
the burden of the decision to the
buyer and away from the seller.
Number one, in many or in most of these
cases, there exists between buyer and
seller a sort of parasocial relationship.
It becomes a relationship that
looks something like the one we
have with celebrities, where we
see them on the TV screen, we see
them on the movie screen, we start
to form a picture of who they are.
We project our favorite attributes
of ourselves onto those people.
We make positive assumptions
about those people.
We come to the conclusion that
we know them better than we
actually do, and probably better
than we ever actually could.
And that parasocial lean makes it harder
for us to evaluate a program purely on
its merit and on our good understanding
of where we are in our practices and
where we are in our personal development.
What ends up happening in parasocial
relationships between, let's call
it the up-and-coming coach and the
well-established coach who's selling the
mastermind, is that although the buyer
rarely says this, she seems to look at
that seller and say, "I want to be her.
I want to do what she does.
I want to have what she has.
I want to feel what I think she
feels, and the best way for me to get
as close to that as possible is to
pay this fee to get close to her."
Now, I don't wanna oversell
that as something that is
always nefarious or creepy.
I do it too.
I have little crushes on
different content creators
online, I don't mean romantically.
I mean, you know, men, women, people
who create things that I admire.
I get this sort of content crush on
these people, and I have the same
kind of parasocial relationship
that I'm describing between the
up-and-coming coach and the seller
of the high-ticket mastermind.
I'm not exempt from any of this.
The difference is my content crushes
aren't asking me for 10 and 15 and $20,000
for participation in a group mastermind
experience whose value isn't totally clear
to me and whose value is harder to assess
because I do have that little bit of a
crush on that person One of the reasons I
believe we should have reasonable refund
policies is that sometimes people make
very expensive purchases based mostly on
that parasocial crush And then they end
up regretting the fact that it happened.
A seller who can acknowledge the
parasocial dynamics and formalize
that acknowledgement through a
reasonable refund policy is, in my
view, an ethical seller or headed
in the direction of ethics anyway.
So the second and third psychological
principles here that benefit the
seller more than they benefit the
buyer are FOMO and social proof.
So we have fear of missing out that looks
something like the up-and-coming coach
considering the high ticket mastermind,
the high ticket certification, whatever
it is, and hearing from peers or friends
or seeing their social media posts or
hearing through the grapevine that, "Oh,
this person that was in my certification
with me is now joining that mastermind.
She really has momentum.
She's really gonna be successful.
I don't wanna fall behind.
I'm already worried that the time
and the money I've spent on this
will be wasted because I will fail.
I can't afford that.
I can't stand the possibility that this
won't work out for me, and I really can't
stand the idea that it would work out
for someone else, and the only difference
between them and me is they said yes to
this high ticket thing, and I said no.
I can't take that risk, so I have fear of
missing out, so I'm gonna move forward."
That FOMO is compounded by social proof
because in the persuasive materials
for the program, you have testimonials
which include earnings claims, like
we talked about in the other episode.
You have amazing photography of
beautifully designed conference
rooms where smiling participants
are writing in the journals that
were in the swag bags that were
included in the enrollment process.
Is there anything wrong
with any of those things?
No.
Those things are actually great,
but we have to acknowledge they can
be weaponized as part of a FOMO and
social proof campaign that blurs the
decision for the discerning coach who's
deciding whether or not that thing is a
particularly good fit for them and gets
them thinking more about the fact that
they don't want to be outside that room.
They wanna be inside that
beautifully designed room.
They want to be writing in that notebook.
They wanna put that notebook then in
the little tote they got when they
walked into the,, room that day after
they finished at the registration desk.
They do not want to miss that.
The desire to be one of those smiling
participants and the fear that they
will miss out on it are powerful
psychological influences that can blur
the decision and take their eye off the
actual benefit of the program right now
based on where you are and who you are,
and in that way stacks the deck against
the buyer and in favor of the seller.
Another psychological factor here
is that these programs tend to be
priced very high, and something
we do as human beings is in the
absence of other good information,
we will take price as a value signal
the higher the price of the experience,
the more likely we are to believe it
is valuable When you combine that with
the parasocial relationship you already
have with that mastermind leader, the
FOMO and the social proof that you get
by hearing through the grapevine that
other people are doing it, and then by
seeing the incredible photography and
videography of past experiences and all
those smiling people Is then supported
by the high price such that you think,
" it's obvious that I have to do this."
All of those factors end up being a
heavy thumb pushing down on the yes side
of the decision scale And that's why
so many people, smart, capable, dynamic
people sign up for programs that they
may end up wishing they weren't part of
because they did the very human thing of
evaluating the program based on something
other than a clear understanding of
its value to them at the current moment
For all of these reasons, I wish sellers
would offer sensible refund policies and
acknowledge the possibility that some
of those who buy should not have bought
Here's another psychological principle
that in my mind only strengthens the
case for a reasonable refund policy.
I've talked to you before about Robert
Cialdini's book called Influence, and in
that book, he talks about the consistency
principle, where human beings have a
powerful drive to feel consistent and
correct in the decisions they've made
And in this case, the bigger the
decision, the greater the need
to feel consistent about it.
So a buyer, that up-and-coming coach
who's nervous to spend the 10 or 15
or $20,000 on the high ticket training
or mastermind thing, they probably
had to generate a lot of emotion.
They had to probably do a lot of internal
cheerleading to get themselves to that yes
And then having done that, it can be
so psychologically expensive to go back
on all of that cheerleading and to risk
the possibility that what they told
themselves about themselves wasn't true.
I've had so many conversations with
people about the decision to do or
not do these programs, and very often
one of the ways they justify their
participation and the big investments
they make in these programs is,
"I am a person who goes all in.
I am a person who gets a great return
on the investments that I make.
I will be one of the stars of
that program because of who I am."
So they make the case for the program
by projecting their character onto it
in order for them to acknowledge later
that the program wasn't a good fit and
that they might even want a refund,
their character comes back into it,
and they struggle and wrestle with
the idea that if they withdraw from
the program or ask for a refund, that
somehow that would negate all of the good
things they've said about themselves.
If I ask for a refund, am I
still a person who goes all in?
If I ask for a refund, am I still a person
who gets a great return on the investments
I make in my coaching practice?
Do I still get to have that picture
of myself if I send an email to the
support team and say, "It turns out
this is not what I thought it would
be," or, "It turns out that I'm not a
great fit for this thing, and I'd like
to withdraw, and I'd like a refund"?
It goes so much against this
principle of internal consistency
that very few people will do it
I want sellers to acknowledge this, and
I want their refund policy to create
an opportunity for a well-intentioned
buyer to acknowledge that they walked
into a room where they didn't actually
belong or where they didn't actually
want to be, and allow them to walk
back out of that room with their
money, but even more importantly,
with their sense of self intact.
No, I am not saying that the
buyer's sense of self is the
responsibility of the seller.
What I am saying is those sellers
have definitely made use of
language and imagery that plays
on identity as a persuasive tool.
And so if you're going to reach for
identity and character as persuasive
tools or as part of the persuasive
process, then I would hope you could
allow for people to reach for those
same tools in withdrawing from the
experience and asking for a refund.
I'm asking for that to be
reflected in a humane refund policy
This is where we get into one of
the greatest benefits to sellers
of having a sensible refund policy
If a person who signed up in good
faith and whose money you took in
good faith comes back to you and says,
"I actually don't think this is the
right fit," or, "As I get into the
experience, it doesn't seem to be
exactly what you presented it to be."
And they may say that with no
accusation, or they may say it with
a tone of accusation, because we're
gonna allow for all types of humanity
and all types of interactions here.
But if they come back to you and say,
"I don't think this is a good fit,"
please understand that even getting
themselves to say that came at a big
psychological cost because they had to
violate the principle of consistency to
even send the email in the first place
So when someone sends that refund
request, they may already be in
a fragile psychological state.
Now again, I am not telling you to
baby them, I am not telling you to
pander to them, and I am not telling
the seller that they are responsible
for the emotional state of the buyer.
What I'm asking you to consider is this:
if it is possible that the person's
already in a semi-fragile state when
they're asking for the refund, and then
you deny that refund, and if you're
casual in your dismissal, or worse,
the tone of your rejection of the
refund request bumps up against their
fears about their own character and
their own identity, and if that sounds
something like, "Well, like we talked
about during the enrollment process,
we only want people who are all in.
We only want people who keep their
commitments Now you're asking that
person to either fold and agree
that the request itself is somehow
a violation of their integrity And
you're asking them to now agree with
their greatest fears about themselves.
"Oh, I guess I am kind of a loser.
I guess I am kind of a quitter."
The seller who is dismissive of
the buyer requesting a refund may
trigger in them The sense that they
now need to fight for their own
character and for their own identity.
So if you say, "We wanted
people who are all in, we wanted
people who are fully committed.
Are you not fully committed?"
Now they either have to say, "Oh,
no,, I guess I wasn't fully committed.
Sorry.
But could I please have that money back?"
Or they have to say, "Oh, now
we're gonna fight about this.
Yes, I am fully committed, but you made
promises A, B, and C, and I don't think
you've actually kept those promises.
So are you actually a person of integrity?
Do you run a company that
cares about its participants?
Are you able to acknowledge your own
imperfection rather than pinning all
of the blame for the interaction on me?
Are you unable to acknowledge
that I didn't have perfect
information in the sales process,
And now we're fighting.
And those fights can end
up in a couple of places.
One of the places they
end up is in chargebacks
where the person says, "Fine, if you
won't give me a refund, I'm gonna go to
Visa, MasterCard, or American Express,
and I'm gonna tell them that you lied
in the sales process and that you did
not deliver the experience you promised
you would, and I'm going to get you in
trouble with your merchant processor.
I'm gonna end up with my money back
anyway, and now you're gonna have a
blemish on your payment processing account
They often don't win those chargeback
cases because often, it's very hard
to prove that you did violate the
promises made in the sales process
And so Visa, MasterCard, American
Express, whoever it is, they say,
"Sorry, is this your signature on this
contract or on this client agreement?
There's not really a lot we can do here
And in that case, from a purely legal
perspective, I tend to agree with them.
This is why I have said I think it's
actually the rarer case that the seller
of these experiences is acting in bad
faith ⦠or attempting to deceive
or attempting not to deliver on the
promises they made in the sales process.
But what I'm trying to persuade the
seller is that doesn't matter that
much, because one of the other places
these disputes end up is in subreddits.
And if you have not been on life
coaching-related subreddits, holy
moly, you've
got some angry people posting some
angry things in these subreddits.
Now, does it matter?
I don't know whether it matters, and
I'll speak more to that in a minute.
But what I'm asking the seller to consider
is, if you've got the option to either
find your name plastered across subreddits
as yet another liar, money-obsessed
scammer, whatever, or not, and if I told
you that a kind refund policy, even a
generous refund policy, could buy you out
of having to do any of that sort of brand
damage management, would you consider it?
If your answer is, "No, I probably
wouldn't consider it," I would encourage
you to go to life coaching-related
subreddits, read through them, and
ask yourself again, "Am I sure I
want my name in threads like these?"
Because if we go back to the moment of
truth where the client says, "I don't
think this is actually a good fit.
I know I signed the agreement, but
I'm asking you to let me out of the
agreement and refund my money," in the
moment that you say yes, not only do
you not trigger their desire and their
need to fight for their identity, to
fight for their view of themselves,
you have not triggered their sense of
justice and fairness, and they feel
like they have to crusade and campaign
against you to all who will listen.
Not only do you not have to deal with any
of that, but you might create a person
who could go into those situations,
whether it's a subreddit, whether it's
a conversation between coaches at a
mastermind or a, a networking event,
what you've done is you've created
a person who might go in there and
say, "Actually, I did do her program.
I signed up for it.
I realized it wasn't exactly what
I was hoping it was gonna be."
Or, you know, "My life got really busy
with my kids," or, "My kid got sick,"
or, "My parent got sick," or whatever,
"and I just needed to withdraw from the
program, and they were so kind about it.,
I really can't speak to their programs
'cause I withdrew pretty early, but they
were so kind in how they handled me.
At the very least, I can say
they're good people to work with."
I believe you could get all of that from
a refund policy that says, "We understand
that life is dynamic and complicated.
We understand that all of us
are acting in good faith and
with the best of intentions, and
sometimes it's not a good fit.
And so if you decide that you
need to move on, we will give
you a quick and courteous refund
What you're actually
purchasing, is brand insurance.
What you're actually doing is taking
advantage of the sixth psychological
principle that I wanna share
with you, which is reciprocity.
Because if a person who knows that they
signed up for your program, they know
they signed the client agreement, maybe
they have some questions about whether
you were totally transparent in the
sales process, but at the end of the
day, they acknowledge, "Well, I said yes.
I put my credit card into the form,
and I signed the client agreement."
When you then act graciously in the face
of the invalidation they're offering you
by saying, "I would like to leave now,"
what you do is you trigger reciprocity,
and now that person feels some amount
of debt to you And the way they often
look to clear that balance is by telling
other people that you are good and you
are ethical, and that, you know what?
They really didn't have to give me
that refund, but they did give me
the refund, and they actually gave
it quickly and kinda with a smile on
their face, and I was blown away by
that, and now I'm gonna go tell people.
The reciprocity principle is one of
the most powerful in human psychology.
So you can either take advantage of it
and make it work in your favor, and along
the way, sleep a little bit better at
night and know that there are probably
people in the world talking really
highly of you, which they may already
be, but also reducing the likelihood
that, that anybody is going through the
world talking about how horrible you
are, and all that can be accomplished
with a refund I also happen to believe
that refund policies are
low risk and high reward.
For all the reasons that we have
talked about today, the refund request
percentage in the coaching industry
is astonishingly low And there's a
negative correlation between the price
of the program or experience and the
percentage of people who ask for a refund.
The higher the price, the
fewer the refund requests.
You are not really taking a risk
by having a humane refund policy.
You are probably making an investment.
I believe that a good refund
policy will end up making you
more money than it costs you
Because even though there's a negative
correlation between the price of
the program and the number of refund
requests, I believe that you have an
opportunity to present yourself as even
more successful, even more evolved,
even more generous, and if we wanna
talk at a very base level, even richer.
Because they're projecting onto
you the idea that you're hyper
successful, that you have it all
figured out, that everything's going
your way, and a generous refund policy
supports that image, and a no-refund
policy does not support that image.
We want to tell ourselves that a
no-refund policy projects confidence,
but what it actually projects is fear.
We want to believe that it projects
abundance and wealth, but what it
actually projects is poverty and scarcity.
Because if you won't give me a
refund, on some level, I have to
wonder if it's because you really
desperately need those dollars.
Whereas if you will quickly give
me a refund, it supports my view
of you as a person who is swimming
through Olympic-sized swimming
pools of gold coins, backstroking
your way through your billions.
That's what a generous refund
policy makes you look like.
It supports the sales process.
You will end up giving some refunds.
It should not bother you
As we conclude, I have to acknowledge
This entire conversation may be moot.
The psychology that I've described
today, the parasocial relationship,
the FOMO, the social proof, all of
these things build momentum toward yes.
But you know what else might
build momentum toward yes?
Angry subreddits.
Here's why.
If I have a very strong parasocial
relationship with you, if I have decided
that you're the person I wanna be and
you've got the answers I need, and
if I have spent months or even years
developing that view of you, the vitriolic
posts in the angry subreddit will go
so contrary to my view of you and be so
invalidating to my projections onto you
that I may even look at those and say,
"Not only do I not believe those, but
they just give me even more motivation
for signing up and moving forward."
And if that's true, then that seller
doesn't need a refund policy because
the person is fully entranced
in the, the parasocial dynamic.
It may be true that those same people
look at whatever negativity they can
find online about a seller and position
themselves against those people.
"I know I'm not one of them.
I am all in, and I'm going to prove
it by signing up for this program."
So it can create a sort of burn
the ships moment where they're
like, "I'm not looking back.
I'm going forward, and that will
be how I know I'm not one of those
whiny people posting in a subreddit."
isn't that funny psychology?
So I have to allow for the possibility
that everything I'm arguing here is
irrelevant anyway But it is my belief that
we would elevate the coaching industry.
We could change the conversation
in and around the coaching industry
with one-sentence refund policies
that sound like this: "If you
ask for a refund, I will quickly
grant it with a smile on my face."
I've been inside these businesses.
I know the numbers Unless these business
owners are truly mismanaging their
cash, they can afford the refunds,
and the refunds in the long run are
less costly than the angry subreddits.
And I'm using Reddit as an example, but
it's not really about the subreddits.
It's about the conversations people
are having with their friends and their
family over dinner and over drinks and
on walks and at the gym about you that
you will never hear but in the long
run will make or break your business
A generous refund policy is a very
small part of a very smart strategy
And with that, I will
talk to you next time