We are selling online. We want to give a money back guarantee if the customer does not like our product. However, we're afraid that we may get many returns due to customers misusing our promise. Then, we will lose money for the shipping cost and other charges. How can we avoid this?
Yes, a small % of people will take advantage of it, but the increase in sales you'll have due to the money back guarantee will more than make up for those cheaters.
Note: Don't make it 100% incredibly easy for people to get their money back. Require them to at least write to you about what they didn't like about the product. That will both serve to lower the 'cheater' %, and will also let you intelligently iterate your product design if you see consistent trends in what people say they didn't like.
Also, keep track of the contact info of all the people that requested refunds. If you see that they consistently order products and ask for refunds stop selling to them.
Even nowadays, most people are honest. Your best bet is to stand by what you sell. The returns policy is a selling point for many, so be careful with how you word your policy. You should always operate under the assumption that the system will not be abused.
With that, there's no way to completely avoid others taking advantage of you. This is part of doing business. Do it right and the advantages (increased conversions, AOVs and customer loyalty) will far outweigh the bad.
In the supply chain business, refunds are a constant pain. How do you verify the goods are OK, and able to be put back in for resale? It's really important to minimise the desire for refunds.
Now, although this question is for a product, let me answer how I manage the refund question for a service.
Supposing I'm working with someone offering business coaching for several weeks, I'll say something like: "If, during the course of the project, you're not happy with the quality of my work/advice or my ability as a consultant, I'll gladly refund any payments you've made."
Seems generous, but in fact, I'm only guaranteeing the quality of my advice and professionalism. If they decide to ignore my advice, or do something else that is going to undermine their own business, I can't guarantee success.
Also, the guarantee is only during the course of the project, which gives me and them a chance to be very open as we go along, to make sure that I am addressing any concerns early on.
It's a question of showing the client what the next step is, so that they can see what they have to do now, while also keeping in mind the grand vision for their business or lifestyle.
Hello! My name is Humberto Valle, I am the founder of www.Unthink.me a strategy formulation and marketing agency. I think that the majority of our clients are companies that sell intangible goods such as software or services. One of the biggest assurances a company can give to prospect clients is their complete and overwhelming satisfaction.
In the years that I have been helping companies formulate strategies for growth competency I don't think I've seen one case that a consumer takes blunt advantage of a guarantee like this. The reality of things is that it will and at least could happen but not to where your business will really hurt from it. Specially if your customer service skills are above par and your work/product is outstanding. I say do it, think about it most companies that use this perfectly tend to offer crazy scary (to them) promotions.
We have a client that offers 200% money back. lol. Has never had to use it in their 3 years since implementing.
some may. Consider it a cost of doing business. Try to develop a relationship before the sale so that you can reduce the frequency. Over time, you can learn to estimate your return rate and either adjust pricing accordingly OR develop conditions for refunds. But generally, you'll get more sales from the guarantee than you will return requests. Consider that they are even more nervous that you'll turn out to be unscrupulous character. When you take that fear away, they will be more likely to buy...
Instead of money back guarantee offer a "110% of your money back" guarantee in the form of store credit. Use a third party to process returns and make the customers jump through hoops so you can play dumb and not be the bad guy. Add a non-refundable handling charge for returns. This is what small print is for.