Well, most people understand that giving a money-back guarantee will increase the conversion rate of their offers; the problem usually is how to deal with the headaches that often come with it.
That problem is what this post will be addressing.
After reading this post, you will be able to confidently give money-back guarantees and still feel protected from customers who may want to take advantage of it craftily.
What is a Money-Back Guarantee?
According to Wikipedia, A money–back guarantee, also known as a satisfaction guarantee, is essentially a simple guarantee that, if a buyer is not satisfied with a product or service, a refund will be made.
Why is a Money-Back Guarantee Important?
Research has shown that a money–back guarantee increases customers’ feeling of satisfaction with their purchase experience, making them likely to return to the store.
Why You Need to Protect your Business from Money-Back Guarantee Fraudsters
According to the Conversation website, Customer returns cost retailers more than US$260 billion (equivalent to 8% of total retail sales) annually in the United States alone.
The return rates vary significantly by category, and by channel type.
It can reach as high as 35% for high fashion apparel sold in traditional stores, and the rates are higher again for internet and catalog sales.
However, in most cases, the returned products are not defective.
Customers abuse the money-back guarantee, so much so that buying a product with the intention of returning it has become a trend known as wardrobing.
In the US, fraud associated with returns costs retailers around US$2 billion during the holiday season alone (US$9 billion annually).
5 Creative Ways to Give a Money-Back Guarantee
Provide an Amazing Product or Service.
A money-back guarantee means that you trust your product and service, so kindly ensure they are of high quality and can do what you said they could.
Actually, offering a quality product and service is a no-brainer; here are 3 other things you should do;
- Make provision for after-sales customer service – do not abandon your customers after they have bought from you.
- Provide support – Teach them how to maximize the value in your product or service by providing how-to videos.
- Spend as much time marketing to your customers after they purchase from you as you did before they bought – this could increase the lifetime value of your customers.
Irrespective of how good your product is, some people will refund, but you will reduce the rate of refund if the quality is excellent.
Provide a Longer Time-Frame Money Back Guarantee.
It means you trust in your product or service well enough to give a longer-term guarantee.
The research also showed that the refund percentage of the 60 days and 30 days stayed the same while sales went up by over 7% for the 60 days term.
When you give a short-term Money-Back Guarantee, you make your customers more conscious of wanting to use the guarantee.
Make Customers Send you back the product before you issue a refund
Some customers would want to ask for a refund when they have defaced or destroyed the product, they would want you to bear the brunt of their own mistake or carelessness.
Some others may ask for a refund for flimsy reasons, but the extra work and cost of sending the product back to you may be enough to sift out the unserious customers from those who have a genuine reason to ask for a refund.
You can make your Money-Back guarantee to cover for factory defects only.
Make Customers give a Meaningful Feedback before you Issue a Refund
Ensure you provide a detailed feedback form which customers must fill before you process their refund, the reason for this is so you can take that feedback and make the necessary improvements and adjustments in your business.
Provide an After-Sale Value
It could be an unannounced bonus offer or adding them to a group with other buyers where they can foster a community; they would not want to ask for a refund and get removed from the community.
Carefully implement some or all of these strategies and watch your refund rate shrink appreciably.
The objective of this post is not to show you how to eradicate refunds but to reduce it.
Let me know which one you can implement right away.
Also, share with me in the comment your experience(s) with Money-Back guarantees.
Kindly share this post. Thanks in advance