4 Facts Every Marketer Needs to Know About Refunds
Many marketers, both large and small (and I include myself among the latter) go bonkers when customers return products for a refund.
As BK, an executive with one of the biggest and most famous direct-marketing publishing companies, told me, "Our books contain great information, incredibly valuable. Why should we allow someone to read the book, benefit from all that great content, and then cheat us by sending it back for a refund?"
If you feel the same way, let me share with you a few important facts about refunds:
1. First of all, a refund request doesn’t mean your product is bad or the customer doesn’t like it.
Example: A customer returns your $300 DVD set on investing in foreign currencies. "It actually seems like a great program," the customer says in his refund request. "But after watching it, I’ve decided this isn’t a business I want to get into. It’s just too much work!"
To me, this is a perfectly legitimate - and reasonable - position for a customer to take … don’t you agree? In this case, offering a refund is not only a legal requirement but also eminently fair: Why would you want your customer to be out of pocket $300 for something he can’t use?
2. Offering a refund doesn’t cost you money.
It makes you money.
Novice marketers fret about offering a money-back guarantee. "If I do that," they worry, "won’t some customers take advantage of me by profiting from the information in my material … and then returning it?"
Yes, some will. But here’s the thing: Offering a money-back guarantee reduces buyer reluctance and increases buyer confidence … resulting in more orders. In almost every instance, the greater revenues and profits from the increase you get in sales by offering a guarantee is MUCH greater than the small amount of money you lose issuing refunds.
After all, would you buy a product for $30 or $100 or more - sight unseen - without a money-back guarantee? Of course not.
3. Longer guarantees are better than shorter guarantees.
If you are currently offering a 10- or 15-day money-back guarantee, extend it to 30 days. Already offering a 30-day money-back guarantee? Then test a 60- or 90-day money-back guarantee.
The longer guarantee term invariably increases response rates and sales, because it eliminates the concern many buyers have with a short guarantee - specifically, that they will forget to open and try the product … and that by the time they get around to it, the guarantee will have expired and they’ll be stuck with it.
Not only that, the longer guarantee actually reduces refund requests.
Reason: The buyer is in no hurry to evaluate and return the product.
Result: The buyer soon forgets about the guarantee … and whether he actually uses the product or not, he just keeps it.
4. Generous guarantees sell more product
than miserly guarantees.
Ever see a guarantee that says you’ll get your money back if the product is returned "in saleable condition?" With a guarantee like that, the prospect worries that if he does return it, you’ll claim it arrived scratched or broken.
Similarly, some sellers of information products offer a money-back guarantee … but only if you offer documented proof that you followed their system and it did not work for you. But what if I get your system, but something comes up and I decide I don’t have time to work through it. Am I stuck with it because I didn’t use it?
The more unconditional your money-back guarantee is, the higher your response rates will be. Conditional guarantees depress orders.
Here’s something interesting to consider …
A year or so ago, I began selling e-books online.
With a hard-copy book, my guarantee is: If you don’t like it, return the book and we will refund your money.
But you can’t really return an e-book. I thought about eliminating the guarantee, but realized that is absurd. Instead, I stress the fact that buyers can get a refund without returning the product.
My standard e-book guarantee reads: "If you are not 100% satisfied for any reason - or for no reason at all - just let me know within 90 days. I’ll refund your $29 payment in full. No questions asked. And you can keep the e-book FREE, with my compliments. That way, you risk nothing."
Result: My refund rate on e-books is lower than for any other information product I sell, including CDs and hard-copy books. In fact, I get virtually no refund requests on e-books, though you could say my guarantee openly invites people to take advantage of me.
My conclusion? Yes, there are a few con artists out there. But most people - especially when you are open and fair with them - are honest and will be fair with you in return.
So follow my advice on refunds. Then watch your sales volume - and profits - soar.
I guarantee it - or your money back!
Robert W. Bly
Guest Contributor
THE TOTAL PACKAGE
Bob Bly is a freelance copywriter, the author of more than 70 books, and co-creator of Early to Rise’s Direct Marketing Masters program. Early to Rise is a free, daily, online newsletter full of useful ideas about marketing, business building, investing, natural health, and much more. Click here to sign up for this unmatched free resource, and learn new ways every day to make yourself healthier, wealthier, and wiser.
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Comment by — September 2, 2008 @ 12:10 pm
Great article and I agree with you 100%. We have always offered a 30-day unconditional money-back guarantee for our membehip program. We don’t even make the customer ask for it. If they cancel in the first 30-days, we automatically refund their money. Usually they cancel because the discover the product is not right for them. We’d much rather have a satisfied non-customer than a dissatisfied customer. Who do you think makes more noise and causes more problems? Providing value first is just good business!
Co Founder
WTPowers.com
Comment by JudyAnn Lorenz — September 2, 2008 @ 12:10 pm
A satisfaction guarantee that doesn’t demand a detailed story is one of my most satisfying shopping experiences. I seldom return, but when I do, the seller has much greater positive karma coming from me than if I have to be frustrated justifying my decision.
Comment by J Michael — September 2, 2008 @ 12:25 pm
Captn Bly:
I like your points.
Please explain how you would TEST different refund time lengths? Would that not frustrate or possibnly infuriate the shorter term testee??? Like the person who got the 30 day vs 90 day?
Thanks again.
J Michael
Comment by Carol Bentley — September 2, 2008 @ 12:27 pm
I totally agree with Bob’s views (in fact I’ve even bought some of Bob’s materials safe in the knowledge he is an ethical supplier I can trust, partly because of his guarantees) and have long advised my clients to offer a guarantee.
Often their guarantee starts off with something fairly low-key, because of their natural nervousness about being ‘ripped-off’. But once the orders start coming in they quickly realise how powerful this approach is.
And of course, if you’re offering anything on the net, it’s almost a given that this is the only way you can truly give people you don’t physically meet the confidence to buy.
Like Bob, I give an unconditional, money-back guarantee on my published book. In fact I tell my readers to highlight the passages they want to note as they read - and even then they can still return it if they wish.
The refund guarantee is printed in the book, which I believe was almost unheard of here in the UK when I published in 2005. I’ve only ever been contacted twice about that guarantee - and that was with a request for a replacement, not a refund, because the book had fallen apart! I’m not sure if that happened because they got a badly bound copy or because it was well-read. Either way didn’t matter - they got their new copy.
So - if you’re reading this and feeling a bit sceptical about offering a guarantee - especially if you have a physical product - I’d strongly suggest you give it a try, you may surprise yourself.
~ Carol
Comment by Jason Moffatt — September 2, 2008 @ 12:37 pm
I’ve written guarantee’s that literally are begging people to rip me off. I may of even used to words "rip me off" in the guarantee too!
Truth is, I think the majority of people feel like chumps when they refund something, especially if they are fond of the seller.
I know I’d feel like a jack-ass trying to refund something from a credible seller.
Comment by Travis Lee — September 2, 2008 @ 12:58 pm
Great post Bob. So many people are scared to offer a refund or guarantee for now reason at all! Here’s one thing I would test. If you’re getting virtually no returns on your $29 ebook, why not raise the price and see if your refunds stay the same or increase? That’s something we’ve always preached, if you have zero or very little refunds, raise the price.
Comment by Jeremy Reeves — September 3, 2008 @ 10:27 pm
Travis I like your suggestions on increasing the price if you get no refunds. That’s a keeper
Bob, great post on guarantee’s and one that many people just don’t quite "get".
I heard of a guarantee someone did (can’t remember his name) who made it a TIMELESS guarantee.
Yep - timeless…anybody, at any time, even the consumers great, great grandchildren…could return it for a full refund.
Now that’s ballsy!
Jeremy Reeves
http://www.GetClientsIn20.com
Comment by Jim Macy — October 22, 2008 @ 11:28 am
I offer a 1 year, 100% money back guarantee on my weight loss program, and in 7-years the only request I have gotten was from a guy who paid with a declined credit card and didn’t return the program. Oh well! The guarantee for a full year make the decision to buy easy.
Your article was great, thanks for the validation. Maybe I should try a longer guarantee. When I started doing money-back guarantees I had heard only about 4% return, but I’ve found it less. What is your experience?