Pro's & Con's of having a 100% Moneyback Guarantee

by madsem
24 replies
I'm a new member here, so HI everyone

I'm actually full-time affiliate since 8 years almost so I would consider myself a well-experienced Internet Marketer. But I only promoted other peoples products (expect for having a small online shop with 20/orders a day when I started my IM career)

So here I am now, creating my first own product which will be an info product, no ebook or downloadable product but a real website with members area that offers tons of info and will have a course-like structure with drip content.

The only problem I have is that I'm not sure whether I should offer a 100% Moneyback Guarantee.

So I would like to start a discussion here and would be grateful if you guys could tell me what you think about having a moneyback guarantee in place.

- Yes or no, and why...
- Pro's and Con's of having a moneyback guarantee...


My site will be fully integrated with Paypal Pro, so I can accept CC's, Debit Cards and Paypal Standard payments.

I read contradicting statements about Paypal and non-tangible products, so I welcome everyone to join who has experience with paypal, digital products and refund policies in general
#100% #con #guarantee #moneyback #pro #refund policy
  • Profile picture of the author rosalinda
    Sometimes there are people who want their money back, even if the service is good.

    I know that, because I've got screwed as well

    Pro - maybe you can get more customers.
    Cons - you lose money. But, as I see, the best things to buy are those who tell me "100% money back guarantee" - either crazy, either rich!
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  • Profile picture of the author Billis
    If you are setting up a Membership site, I would be inclined to have a 5 - 7 day trial offer at a discounted price, with access to only part of your site. Although if you are going to drip feed content, that should not be a problem.

    If you offer a trial offer for only a few dollars, you will not need the guarantee. Once people see what you have to offer, they will either stay on or opt out.

    I also understand that having a longer guarantee period, reduces the amount of refunds.

    To Your Success,

    Rob
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  • Profile picture of the author Jillycakes
    I think one of the most important reasons to have a full money-back guarantee is it shows you stand behind your product. Not offering one can sometimes look shady, like you're one of those people who just wants to steal money from some poor sucker who was dumb enough to buy your snake oil.

    Aside from food, water, and oxygen, no product is going to work for everyone. Offering a guarantee not only acknowledges that fact, but it also says that you're an honest person who believes they offer a satisfying service.
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  • Profile picture of the author Will Edwards
    Pros: More Sales
    Cons: More Refunds

    But, generally, the additional sales will out-weight the refunds!

    Will
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    • Profile picture of the author King Shiloh
      Banned
      Originally Posted by Will Edwards View Post

      Pros: More Sales
      Cons: More Refunds

      But, generally, the additional sales will out-weight the refunds!

      Will
      Certainly, it will...if you have a solid reputation and if your product has a very good value.

      100% Moneyback guarantee is one of the policies, if not the only policy, that shows or proves to your customer/client that you have confidence in yourself and your product.

      It's a mark of quality assurance. It's also a seal of originality.
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  • Profile picture of the author Mohsin Rasool
    For me personally 100% money back guarantee has always increased the sales.

    Well con is ..NONE!
    as someone going to take advantage of your guarantee is going to take it even if you offer it or not.
    Yes they have so many options to get money back, like paypal, their bank...so better you give them yourself to save you time and hassle. And yes they are very few who will do this... not even 1% !!!! yeah less than them!
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  • Profile picture of the author Andy Fletcher
    Don't think of refunds as losing money you would've otherwise got. Think of it as gaining money you would otherwise have lost.

    I'm a sufficiently strong believer in always offering a nice long refund period that it's one of the few things I don't even bother testing any more.
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  • Profile picture of the author Adam James
    When you offer a guarantee you take the risk out for the prospect, so this is a great way to gain trust and show you stand by your product.
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  • Profile picture of the author Lee Wilson
    Refunds are something you should take account for in any business. They are part of your expenses and your product price should earn enough to cover those expenses. If the refund rate is too high, something is wrong and needs fixing. Money back guarantees are expected on pretty much everything, online of off. It's how things are done now.

    Don't drag behind the times, try getting in front of them, it will do your business a favour and besides, it's a complete waste of your time to try avoiding refunds. I don't know about other parts of the world, but here in the UK you are bound by laws and credit companies' own terms.

    In short, you will be refunding whether you like it or not, whether you state it or not and whether you refuse to honour it or not. The money merchant will chargeback every complaint on your behalf. The paying customer will nearly always win even when they are clearly in the wrong. The credit company will also do a chargeback for a longer period than the life of your own guarantee.

    Bottom line, respect your customers and you will make more money. Accept that some of those customers will infuriate you, get over it and move on when it happens. You will still make more money. Pros - a better business. Cons - annoyances that are beyond your control anyway.

    Lee
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  • Profile picture of the author madsem
    Great answers so far, but a little too much based on personal opinions. I was expecting more like "we have tested both, with moneyback guarantee conversion rate increased by xy%, refund rate increased by xy%"

    And also I expected to hear some more in terms of paypal and non-tangible products.

    I read a lot, some say paypal sides with the merchant, others say they don't.

    Also I don't wanted to start a discussion what morally might be better, since I think both options can be ok. As long as you communicate it to a customer before he buys that it's not refundable?

    So far everyone here says it increases sales to have a moneyback guarantee, but also refunds. Anybody care to go a little bit more in detail?

    Since even Mr. Shoemoney doesn't offer refunds on his course as I found out. I've been researching a lot different merchants and offers in various niches and found that a lot of the bigger offers have no refund, but also a lot do offer refunds...
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    • Profile picture of the author Lee Wilson
      Originally Posted by madsem View Post

      Great answers so far, but a little too much based on personal opinions. I was expecting more like "we have tested both, with moneyback guarantee conversion rate increased by xy%, refund rate increased by xy%"

      And also I expected to hear some more in terms of paypal and non-tangible products.

      I read a lot, some say paypal sides with the merchant, others say they don't.

      Also I don't wanted to start a discussion what morally might be better, since I think both options can be ok. As long as you communicate it to a customer before he buys that it's not refundable?

      So far everyone here says it increases sales to have a moneyback guarantee, but also refunds. Anybody care to go a little bit more in detail?

      Since even Mr. Shoemoney doesn't offer refunds on his course as I found out. I've been researching a lot different merchants and offers in various niches and found that a lot of the bigger offers have no refund, but also a lot do offer refunds...
      My response has nothing to do with personal opinion or the morality of offering refunds. If your only concern is the botom line then asking for other peoples test results isn't going to give a definite answer, you'd still need to test it yourself. As for Paypal siding with the seller or buyer, well, like I said, refunds aren't optional to you, all money merchants will do chargebacks, probably more so with CC companies than Paypal.

      The only thing that might make the difference is by not making it easy, some will not bother asking for a refund. A serial refunder OTOH is getting his money back anyway, in most cases. I'm in the UK, things may be different here so like I say, only your own tests will give you an answer.

      lee
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      • Profile picture of the author madsem
        Originally Posted by L Wilson View Post

        My response has nothing to do with personal opinion or the morality of offering refunds. If your only concern is the botom line then asking for other peoples test results isn't going to give a definite answer, you'd still need to test it yourself. As for Paypal siding with the seller or buyer, well, like I said, refunds aren't optional to you, all money merchants will do chargebacks, probably more so with CC companies than Paypal.

        The only thing that might make the difference is by not making it easy, some will not bother asking for a refund. A serial refunder OTOH is getting his money back anyway, in most cases. I'm in the UK, things may be different here so like I say, only your own tests will give you an answer.

        lee

        I know, I got that... I will also do my own tests I'm just looking for some general experience that people had. And in the states you don't have to give a refund as far as I know since a lot of offers I see (all digital products, physical you have to give refund I think) have no refund policy...
        Of course a customer is happier and builds more trust when he knows it's risk-free for him, but of course I also want to protect my business.

        I'm missing the experience there so I ask people who have their own offers to get an idea what the majority of product owners does and how their experiences were.


        In my thinking no-refund policy will increase revenue, but also chargebacks while a moneyback guarantee will increase sales and reduce chargebacks.

        Question of course is what weighs more, the increased revenue or the reduced chargeback costs
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  • Profile picture of the author Dan Bainbridge
    For me I always stress the guarantee. In my experience it causes way more sales than refunds - as it tips potential buyers over the edge who are skeptical, unsure etc.

    I think it was Dan Kennedy who gives creative examples of guarantees and shows you can ham them up - I think he names the best one ever as "if our skin cream doessn't make your friends accuse you of having a face lift, we'll give your money back" - a little cheesy, dramatic, and fun... but just shows that you can make your refund statement work for you.
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  • Profile picture of the author taylormarek
    Yes, offer a moneyback guarantee for the first 30 days (or 1/5/7 day trial). It is a good practice and makes the buyer happy about themselves. They typically forget, but if the content is good they won't care.
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    • Profile picture of the author vok
      I'm going to split test this but what does everyone think of 60 day money back guarantee? More refunds than offering a 30 day or will it help convert the traffic even more into sales if you offer a longer trial period?
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      • Profile picture of the author taylormarek
        Originally Posted by chriswick View Post

        I'm going to split test this but what does everyone think of 60 day money back guarantee? More refunds than offering a 30 day or will it help convert the traffic even more into sales if you offer a longer trial period?
        That one works even better. Peace of mind and the buyer never has to worry. Test it out, would love to read your results.
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      • Profile picture of the author Zero
        Originally Posted by chriswick View Post

        I'm going to split test this but what does everyone think of 60 day money back guarantee? More refunds than offering a 30 day or will it help convert the traffic even more into sales if you offer a longer trial period?
        Gary Halbert said this if i'm not mistaken, give a 1 year guarantee. The longer it is, the less likely you are to get a refund..since it gives them plenty of time to either try it out or they'll keep putting the 'refund' thing back like "I'll do it next week" and they'll keep sayin that and end up forgetting.

        Perry Belcher/Ryan Deiss tested this as well, and they said on most occasions, the 1 year guarantee worked best for them.

        For me, what they said was more than enuff, although if u wanna test it out, you can do that.
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  • I haven't split tested it but my gut feeling tells me that a guarantee policy scores more sales than refunds, so all in all would be positive for the vendor.
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  • Profile picture of the author Michael Franklin
    In order to gain the buyer's trust, you must be able to clearly shift away from the transaction as much of his perceived risk of purchasing your goods and/or services. You must make him feel most at ease....Money back guarantees and testimonials are the 2 best ways to "reverse the risk".
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  • Profile picture of the author Sam1985
    Each service has their Pros and Cons, so i am giving some pros and cons of 100% money back guarantee.

    Pros: Preventing Charge backs, Protecting Consumer Rights, Building Credibility, A Useful Sales Aid.
    Cons: More Refund, Satisfaction is Never Guaranteed., The Short Deadline.
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    • Profile picture of the author Zero
      If you're selling some high end product that costs several 100-1000s of $'s, then you probably don't need to. I've seen such tactics being used, they don't offer a guarantee on these high ticket products, because they only want serious people to buy.

      The easiest example i can find is this 1 by Ben Settle:
      Street Smart Email System


      Because I have just created a new course revealing all my most profitable email secrets. And (for now) I am releasing it to the general public to those who qualify.

      What do I mean by "qualify?"

      Well, for one thing...


      This Course
      Is Not "Cheap."


      It's actually pretty darn expensive.

      It's also not "slicked up" with pretty graphics, either. (Total "plain Jane" layout, with telephone-quality audio.)

      And, it does not come with a money back guarantee.

      You see, this is my "bread and butter" skill I live and die by. And while I obviously want to sell this course (and went through the trouble to write this ad), it won't break my heart if it does not sell lots of copies. Frankly, I'm creating "rival gunslingers" by selling it at all... and may eventually stop offering it to the mass public altogether.

      So if those things turn you off... good!

      You don't qualify, and there's no reason to read further.

      However, if you are a serious marketer who wants to learn the art and science of writing short, money-making emails in just minutes per day, then here are a few examples of what's inside...



      You should offer a guarantee...but make it a very long one like 90/180 or even a full year guarantee. The longer it is the less returns u probably get.
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  • Profile picture of the author Rus Sells
    It depends on the product or service your offering. I am considering putting a program together and a money back guarantee is out of the question.
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  • Profile picture of the author Ruby Rynne
    On a practical level, you'll be giving refunds (through disputes and chargebacks) to people who aren't happy, whether you offer them or not.

    On a marketing level, I think it's a good plan if you have a solid product. If there's any doubt as to the solidity of the product though (ie unless your sales letter kicks butt and allays all possible objections and fears), the presence of a guarantee statement *might* introduce doubt where it didn't previously exist. I guess what I am saying is if your customer gets to the buy button totally ready to buy then the guarantee could be the clincher. If they aren't sure by the time they get to the button then the guarantee could make them think 'why does it need a guarantee? Maybe it's not that great'.

    Tricky psychology I think.
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    • Profile picture of the author Joe Mobley
      Let me suggest that you may be asking the wrong people. I would recommend that you check the Terms of Service (TOS) of your vendors.

      I believe that PayPal and Clickbank REQUIRE you to offer a money back guarantee.

      Also remember that a 100% guarantee can be setup with no out-of-pocket expense to you, or at most, a very small amount.

      Give it some thought.

      Joe Mobley
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