Does Anyone Have Split-Testing Results on the Money Back Guarantee?

by tpw
14 replies
We see people arguing over the technicalities and reasons for Money-Back Guarantees all the time here in the forum.

I know that PayPal only requires me to prove delivery on a digital product. If I can show delivery was made, then they do not force me to do a Money-Back Offer on a digital product.

I have seen people argue the pro's and con's of a money-back guarantee on a digital product.

But does anyone have any hard-numbers to share from a split-test on this factor?

I have always offered them on my digital products.

The one I released in October has a one-year guarantee.

The one I released last week, I actually forget to add it to the sales page.

Both products are converting right now at an average of 8%.

Overall, the one without a guarantee is converting at 8%, and the one with a guarantee is converting at 5%.

But all things are not equal.

So the question is, has anyone actually TESTED this, or are we all operating on hearsay?

Please share.
#back #guarantee #money #results #splittesting
  • Profile picture of the author E. Brian Rose
    Tim Castleman once told me that he split tested a group for these results. In group one he offered a no return policy. In group two he offered a no return policy. The end result was no returns from either group.
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    • Profile picture of the author tpw
      Originally Posted by E. Brian Rose View Post

      Tim Castleman once told me that he split tested a group for these results. In group one he offered a no return policy. In group two he offered a no return policy. The end result was no returns from either group.

      LOL

      Yeah, I have heard that story.
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      Bill Platt, Oklahoma USA, PlattPublishing.com
      Publish Coloring Books for Profit (WSOTD 7-30-2015)
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      • Profile picture of the author myob
        I used to offer unconditional money back guarantees on all my products but that seemed to encourage free loaders resulting in high returns. Now it's never explicitly offered directly in promotions, but instead after the sale. This has dramatically increased reorders and referrals.

        @lburrell
        A no return policy converts exactly the same as a no return policy. So why would you offer a guarantee?
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        • Profile picture of the author lburrell
          Originally Posted by myob View Post

          I used to offer unconditional money back guarantees on all my products but that seemed to encourage free loaders resulting in high returns. Now it's never explicitly offered directly in promotions, but instead after the sale. This has dramatically increased reorders and referrals.

          BTW, I got the joke.
          Good idea!
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        • Profile picture of the author paulie888
          Originally Posted by myob View Post

          I used to offer unconditional money back guarantees on all my products but that seemed to encourage free loaders resulting in high returns. Now it's never explicitly offered directly in promotions, but instead after the sale. This has dramatically increased reorders and referrals.
          Paul, by offering this revised refund strategy, has it impacted overall sales in any tangible way?

          Paul
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          • Profile picture of the author myob
            Originally Posted by paulie888 View Post

            Paul, by offering this revised refund strategy, has it impacted overall sales in any tangible way?

            Paul
            Absolutely. My online products are very expensive; typically $150-$300, so now I no longer indicate a guarantee of any kind as part of the promotion. Sales have since dropped by around 20%, but refund requests have dropped from nearly 30% to almost zero. I can assume that perhaps as much as 30% of sales were to free loaders taking advantage of the unconditional money back guarantee. Net profits are in fact 10%-20% higher by not offering a money back guarantee in the promotion.
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            • Profile picture of the author Alexa Smith
              Banned
              Originally Posted by myob View Post

              Net profits are in fact 10%-20% higher by not offering a money back guarantee in the promotion.
              They're bound to be, aren't they? :confused:

              Net profits must surely be highest without a money-back guarantee, next best with an extremely long money-guarantee, and worst with a short time-limited guarantee? I mean ... we can't "need split-testing" to know this, surely?! :confused:

              I have actually seen split-testing, but none with links I can post here, which shows (very reliably and consistently indeed - unsurprisingly) that the proportion of guarantee-claims is in inverse proportion to the length of the guarantee: you'll get far more guarantee claims on a one-month guarantee than you will on a one-year guarantee. But this is obvious anyway, isn't it? Copywriters/marketers have known this for a century or so, surely? :confused:
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            • Profile picture of the author tpw
              Originally Posted by myob View Post

              Absolutely. My online products are very expensive; typically $150-$300, so I do not indicate a guarantee of any kind as part of the promotion.

              Sales have since dropped by around 20%, but refund requests have dropped from nearly 30% to almost zero. I can assume that perhaps as much as 30% of sales were to free loaders taking advantage of the unconditional money back guarantee.

              Net profits are in fact at least 10% higher by not offering a money back guarantee in the promotion.

              Just to clarify...

              Nearly all of the refunders were in the 20% that you kicked in the nuts when they came to your sales page.

              I can buy that. No refunds is always a plus.

              Net profits are up 10% on 20% fewer sales, so more people are buying the upsells and repeat purchases?

              You almost had me sold on doing it the way you are doing it...

              But I have already kicked most of the serial refunders in the balls, even with the guarantee in place.

              So it stands to reason that if I add the guarantee to the product that is missing it, I maybe could see a slight increase in sales...

              Because I have to wonder if the full 20% drop in sales was the result of people who are serial refunders leaving your sales page. I suspect that maybe a small percentage of that 20% were serious people, who simply decided that the risk was too high.



              @Alexa: yes, what you are sharing is the "common knowledge".

              And I can easily see why in many cases, it would be right.

              But given as much talk as we have heard about not including one, I want to see if anyone has anything concrete rather than just a gut instinct.
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              Bill Platt, Oklahoma USA, PlattPublishing.com
              Publish Coloring Books for Profit (WSOTD 7-30-2015)
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              • Profile picture of the author Steven Wagenheim
                Bill, I can only speak from my own experience with my own products, but
                for me...in most cases...it makes HUGE difference.

                Rarely, because of that, will I not offer some kind of a guarantee. In fact,
                for many of my products, I offer 6 months to a year.

                Now, having said that, a lot depends on the offer.

                My last offer had a conditional guarantee.

                It still sold out in under 10 hours.

                You'd think, going by the standard belief, that having a conditional guarantee
                would have hurt the offer. It didn't. At least it didn't keep it from selling out.

                I'm not 100% convinced that a guarantee is required for all items, but in
                my experience, for most items...it matters a lot.

                Take this for what it's worth to you.
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              • Profile picture of the author myob
                Originally Posted by tpw View Post

                Just to clarify...

                Nearly all of the refunders were in the 20% that you kicked in the nuts when they came to your sales page.

                I can buy that. No refunds is always a plus.

                Net profits are up 10% on 20% fewer sales, so more people are buying the upsells and repeat purchases?

                You almost had me sold on doing it the way you are doing it...

                But I have already kicked most of the serial refunders in the balls, even with the guarantee in place. ...
                LOL! What kind of sales copy do you write? Of course all my products are fully guaranteed, and I do give refunds when asked. I just don't around blabbing that they are free to kick me in the balls with my guarantee.
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                • Profile picture of the author tpw
                  Originally Posted by myob View Post

                  LOL! What kind of sales copy do you write? Of course all my products are fully guaranteed, and I do give refunds when asked. I just don't around blabbing that they are free to kick me in the balls with my guarantee.

                  I am a special needs copy writer...

                  I am always flying by the seat of my pants...

                  And I can almost bet most copy writers would look at my copy and find dozens of ways to prove to me that I am an idiot...
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                  Bill Platt, Oklahoma USA, PlattPublishing.com
                  Publish Coloring Books for Profit (WSOTD 7-30-2015)
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        • Profile picture of the author tpw
          Originally Posted by myob View Post

          I used to offer unconditional money back guarantees on all my products but that seemed to encourage free loaders resulting in high returns. Now it's never explicitly offered directly in promotions, but instead after the sale. This has dramatically increased reorders and referrals.

          That is interesting.

          I think I have appropriately dealt with serial refunders in my copy, by letting them know that my product is not a magic button product. LOL

          Since I adopted that language my refunds dropped precipitously to almost none.
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          Bill Platt, Oklahoma USA, PlattPublishing.com
          Publish Coloring Books for Profit (WSOTD 7-30-2015)
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  • Profile picture of the author lburrell
    Why wouldn't you want to offer a guarantee? Even if they do convert the same, does it not atleast give the perception that you stand behind your product?
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    • Profile picture of the author tpw
      Originally Posted by lburrell View Post

      Why wouldn't you want to offer a guarantee? Even if they do convert the same, does it not atleast give the perception that you stand behind your product?

      I do stand behind my products. I just FORGOT to add it to the sales page.

      And now I am wondering if there are any actual proven tests that confirm it will improve sales results...

      I have heard a lot of people argue that the No Returns policy should be expected on digital products, b/c we have no idea whether they are not going to continue to use the product after refund.

      Please don't ask me to be too specific about why people do the No Refund policy, because I have never really believed that to be the way to go.

      It is just a question for now, before I put the guarantee on the product that I forgot to add to the copy. Seriously...
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      Bill Platt, Oklahoma USA, PlattPublishing.com
      Publish Coloring Books for Profit (WSOTD 7-30-2015)
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