Money back guarantees are nothing new. They have been around for decades if not hundreds of years. Guarantees help to alleviate the risk of buying. I’ve seen guarantees for products and services priced from $9.97 to $4,997.00 and higher. Many business people are averse to offering any guarantee. The biggest fear is that too many customers will try to use the guarantee and a company will “lose their shirt.” In reality this rarely happens. Some people I know say their return rate for their money back guarantee is in the low single digits, less than 5%.
A Real World Example
It takes a little daring to offer a guarantee. One of my business mentors, Ray Justice, was the first to offer a 24 hour “clean car” guarantee in the car wash industry. If you car became dirty within 24 hours you could get it washed for free. At that time people thought he was dooming his business with such an audacious idea. Today most car washes offer at least a 24 hour “clean car” guarantee. Some car washes offer a week or longer clean car guarantee.
Money back guarantees aren’t for every business person or service offered. But if you take some time to implement a guarantee you can make the potential purchase of your product or service even more attractive. Think through the process carefully. Below are some points and suggestions.
Some People Will Abuse the Guarantee
There are some people who will take you up on your guarantee. They’re going to purchase your product or service knowing that they’ll make use of the guarantee. This happens in every industry regardless of how good the product or service. Remember most guarantees are measured in single digit percentages. You’re going to need to accept a little risk with the opportunity for greater reward.
Set a time limit on the Guarantee
Depending on the product or service the length of guarantee can vary. I’ve seen guarantees as short as a week to an entire lifetime. Make the time frame long enough to properly evaluate the service or product, plus additional time to evaluate the benefits. Again, take some time to find the right length of time. Look towards your competition and see what they are offering.
Well Defined Return/Refund Process
Let your customers know what is required to properly process a guarantee. Be very specific and clear on the return process. Leave nothing to chance.
Use a Guarantee to Improve Your Product or Service
If a customer is unhappy and request a refund use the opportunity to collect feedback. Use the customer feedback to improve your product or service. This will lead to a better product and fewer returns in the future.