Does having a guarantee reduce refunds?

Guarantees do reduce refunds. The thing is though is that you've got to have a good sales letter written. A guarantee is just a cog in the whole sales letter system. The idea behind giving a guarantee is security. The customer feels like he's not out anything when he purchases the product.

So if you give a great guarantee, the chances of the customer wanting a refund is reduced. Of course you also need to make sure your product is worth the price you're charging, or you'll be getting refund requests as fast as you have sales.

I don't see how a guarantee would reduce refunds. If you aren't guaranteeing the product, wouldn't "All sales be final". I understand you'd get some chargebacks and whatnot.

I think guarantees increase refunds, but they also increase conversions and the net result is more money.

With a lot of ebook type products, I use the "Barnes and Noble" test. I'll buy the ebook because of the refund policy and then flip through it...if it's not what I thought, I refund immediately. My thought process is that I probably wouldn't have purchased it had I gotten the chance to flip through it like I would at a bookstore.

Increase sales, yes. Reduce refunds? I don't think so. Clients judge your product quality after purchasing, not your guarantee parameters.

If you've ever done any copywriting or taken any copywriting classes you would understand how guarantees help reduce refunds. They ABSOLUTELY help reduce the risk of having to pay out refunds in that they give the customer a safety net. And what's really funny is that the bigger the guarantee, the less of a chance of having to refund the customer.

I've sold a lot, most as all-sales-final no refund/guarantees. I offer generous previews of anything I sell, like video clips from DVDs, or preview webinars, so that potential customers can see an honest sample of what they're getting before they buy.

Think about it -- Amazon and everyone else who sells DVDs, and video games, it's a multi-billion dollar industry, all with no refunds/all sales final since stuff can be copied. That's what preview video clips (or trial versions of games) are for, is to show a demo, so that no refund policy is needed, to protect against bs refunders/copiers.

It's also a function of your trust level you've built with customers, and how well known you are, and other factors. The answer of course is to Test with your marketplace, niche, offers, lists.

After hearing that having a one year, no questions asked refund policy will actually result in less refunds, not more I tried in and have been going a year and a half on that site with no refund requests. Apparently people don't feel the need to keep thinking of getting a refund in thirty days and end up forgetting about it. Now of course this will not stop the "instant refund" people from hitting you. One other factor that may keep the refunders away from my info product, is that my product comes with four one on one coaching sessions and the product by itself is not much good without the coaching. And by the time they have had the coaching they are totally sold.

OK, thanks and good luck, Ed.

Having no guarantee eliminates refunds! Ain’t that great?? :p

You might have more success, conversion wise and refund wise, in having a lifetime or 1 year guarantee than with just a 30 day one. More perceived value. (Just provide the value that warrants such a guarantee, though - unless you’re confident that the product or service sucks - then just take their money :p )

That should be lengthening the period for the guarantee reduces
refunds. Not just the fact of having a guarantee. Are you sure
you read right?

If you did, ask for a refund.

-Ray Edwards

Remember too we're in a new economy, so merchant safeguards are necessary, which is why the world's top online retailer, Amazon.com, has a no-refund policy for all their movies, mp3s, DVDs, video games, CDs and the rest (once opened it cannot be returned).

Amazon.com Help: Items That Can't Be Returned

The World's #1 retailer online has a no-refund policy (for copyable media). I've sold to thousands of people for years with no refunds, very successfully. Could I have made more sales if I'd offered refunds/MBGs? Yeah, but I'd also have a big overhead admin headache managing them, blacklisting refunders to avoid serial refunders, selling to entitlement mentality lookie loo refunders and all the rest of it. And besides, of thousands of customers I've had a lifetime less than 1.8% dissatisfaction/problem rate, with most of my customers buying from me multiple times. So offering a refund isn't necessary, due to content quality and previews.

NEW ECONOMY:
- people search blackhat forums and filesharing sites to steal content for free w/downloads
- people are much more discerning and cautious about buying... so upfront proof elements, industry credibility and upfront free-sample video clips, webinars are necessary
- buyers are burned out on all the aff pitches for overpriced launched $2k guru crap
- in this particular welfare handout political climate we're in, "Entitlement mentality" and "give it all to me free, now" works against ethical marketers, because now you have a bunch of people half-expecting to get a lot of stuff for mooching for freebies. So offering refunds buys into that herd mentality, and you are seeing high refunds most likely if you offer them.
- The oldschool "never fail to offer MBGs" direct-response/copywriting tactics are not 100% right for all markets and all info-products.
- Test. Test. Test. Split-test offers, MBG vs no MBG, all those variables, to find what works best in your niche.
- the correct question to ask vs refunds, is instead "does offering a guarantee/MBG increase net profits and LCV/lifetime customer value", in my niche?

-k

p.s. this topic has been done to death, look in the old/archived WF for lots of threads on it, too.

I have found over the years that offering a money back guarantee does not increase refunds if the product delivers what you say it will. It does increase sales if you have the right kind of traffic coming to your site.

On the flip side, some people will request a money back guarantee even if you do not offer one and to those people I just give it to them anyway. It is not worth the hassle to fight over a 1 in 100 or 1 in 1000 request like that.

Doesn't really matter whether it does or not given that you need to have a guarantee with most selling platforms, and don't forget you may be breaking trading laws in the buyers country, and / or your own, if you don't offer a guarantee.

What I have seen however is that having a LONGER guarantee than the norm, can reduce refund rates.

The Guarantee message is just part of the whole salesletter and I think it does help to let people know that they can purchase the product risk free. If they do not like it, they can request for refund.

If the product is not junk and it does provide good value, most people will not request for refund. Of course there will be some serial refunders who try their luck to get the product for free but the good thing is that most of the people on the internet are honest people.

I would instead focus my effort on giving them more values and getting more sales as that is the activity that will increase the bottom line.

Very interesting to hear both sides of this. My own initial reaction was completely in line with Malcolm (above) but I also believe that Scrofford's point is completely valid.

I have always worked on the premise that the quality of the sales letter is what gets the sale and the quality of the product/service is what stops the refund request. Though, of course, you will always get a minority who will want to take advantage of you; it is the price of doing business the way we do.

Will

Well obviously having a guarantee is only ever going to increase your refund rate. No one can argue that.

But that's not what is important.

All that matters is the profit you walk away with at the end of the day. That's why we are all in business, right? It's ok to increase your refund rate so long as your sales are also increasing in line with those refunds.

A good refund policy should make you more money. Yes, by having a guarantee you are going to get refunds but by also having that guarantee you should be getting more sales so those refunds are quite insignificant.

Troy23 - there is a ton of evidence that shows that, other things being equal, the better the guarantee, the more you will sell.

It's definitely a bit worrying offering a fantastic guarantee. You just think: "everyone's going to cancel". But in practice this doesn't happen.

When I introduced a lifetime, money-back guarantee to my mail order herbal company, 25 years ago, other people in the company were very, very concerned. But, happily, we did not get a flood of refunds and even now a refund is very rare.

Online it's a little bit different in that it so easy to refund an electronic product and refund rates of 10 to 20% are not uncommon.

However, you have to accept that there is a core of serial refunders who will always refund anyway and you get nowhere by trying to squeeze their money out of them – except aggravation to yourself.

Those people aside, I will always lean towards having a solid guarantee. As others have commented, the product has to be good. That's a given.

Jason Fladlien is one person who takes a guarantee very seriously. In at least some of his offers he really big is up the guarantee and actually offers a double guarantee - it's worth checking out his methods.

One way to reduce refunds, incidentally, is to send a physical product. This can be done easily enough at the checkout by having a deal with Kunaki and a check box. Not everyone will take it: but every little helps. And, if it's an expensive product, how about sending everyone a bunch of physical flow-charts, diagrams, checklists - and to refund they have to return them? I am not saying make this a major feature because you want to cut refunds: but if you did do it, it would make a serious plus in your sales letter (and as a happy by-product, reduce refunds.)

Good luck! And do think carefully about including a guarantee – it's an important part of encouraging sales.

Best wishes, Malc

Troy23 - there is a ton of evidence that shows that, other things being equal, the better the guarantee, the more you will sell.

It's definitely a bit worrying offering a fantastic guarantee. You just think: "everyone's going to cancel". But in practice this doesn't happen.

When I introduced a lifetime, money-back guarantee to my mail order herbal company, 25 years ago, other people in the company were very, very concerned. But, happily, we did not get a flood of refunds and even now a refund is very rare.

Online it's a little bit different in that it so easy to refund an electronic product and refund rates of 10 to 20% are not uncommon.

However, you have to accept that there is a core of serial refunders who will always refund anyway and you get nowhere by trying to squeeze their money out of them - except aggravation to yourself.

Those people aside, I will always lean towards having a solid guarantee. As others have commented, the product has to be good. That's a given.

Jason Fladlien is one person who takes a guarantee very seriously. In at least some of his offers he really big is up the guarantee and actually offers a double guarantee - it's worth checking out his methods.

One way to reduce refunds, incidentally, is to send a physical product. This can be done easily enough at the checkout by having a deal with Kunaki and a check box. Not everyone will take it: but every little helps. And, if it's an expensive product, how about sending everyone a bunch of physical flow-charts, diagrams, checklists - and to refund they have to return them? I am not saying make this a major feature because you want to cut refunds: but if you did do it, it would make a serious plus in your sales letter (and as a happy by-product, reduce refunds.)

Good luck! And do think carefully about including a guarantee - it's an important part of encouraging sales.

Best wishes, Malc

A little while back I asked the same question you did and got some great answers here on this thread: http://www.warriorforum.com/main-int...my-ebooks.html