Avoid This Common Mistake With Your Money-Back Guarantee


“Relationships of trust depend on our willingness to look not only to our own interests, but also the interests of others.”Peter Farquharson

The best guarantees are:

* fair

* generous

* long-term

* unconditional

When any of these four elements is missing, sales are likely to suffer as a result.

Making your guarantee generous, long-term, and unconditional isn’t tricky. Those elements are pretty straightforward — almost mechanical to write. What trips up many marketers is wording the guarantee in a way that makes it 100% fair to the customer.

For example, many of my clients are newsletter and magazine publishers. And a number of these publishers offer lifetime guarantees. They permit their subscribers to cancel at any time and receive a prorated refund on “unmailed issues.” But if you offer both a “bill-me” option and a payment-with-order option (which is, of course, more desirable from your point of view), a lifetime guarantee like this actually gives the customer an incentive NOT to pay up front.

Think about it.

Say the customer checks the “bill-me” option for a monthly magazine, gets his first issue, and then writes “cancel” on his invoice.

The publisher doesn’t send him a bill for one issue and doesn’t ask that the magazine be returned. So the customer gets a free issue.

But if the customer pays in advance and then cancels after the first issue, he gets a refund for 11/12 of the subscription price (for the 11 unmailed issues) and therefore ends up paying for the issue received.

Why should the “bill-me” customer get a free issue when the payment-with-order customer doesn’t? It not only isn’t fair, it also doesn’t make sense from a marketing point of view, since it is bound to limit the number of paid orders you receive.

Solution: Offer your payment-with-order customers a full money-back guarantee within the first 30 days and a prorated refund thereafter.

Here’s another example — a guarantee that says you will get your money back “if you return the product in salable condition.”

Why isn’t that fair? Well, because the customer doesn’t have any control over the way UPS handles the box. And your guarantee implies that if the product is damaged in transit on its way from the customer to you, the buyer doesn’t get a refund. That would make me — and many other people — hesitate to order from you.

I was in a video-game store where a clerk refused to refund a woman’s money because she was returning a game her son had gotten as a gift one day after the 30-day guarantee period expired. I interfered and explained to him what he was doing wrong. The woman got her money back, and I got a dirty look.

Remember, you benefit enormously from offering a guarantee — because it gets more people to trust you and buy from you.

But the customer benefits too: He gets a chance to try your product risk-free.

Most people won’t take advantage of your guarantee. If you sell a quality product, accurately described in your marketing, at a price that’s fair in relationship to its value, your return rate will be low — probably less than 5 percent.

That still means one of 20 customers will ask for a refund. Return their money promptly and with good cheer. Few things will cause more customer dissatisfaction and ruin your reputation faster than being difficult, adversarial, and uncooperative when people believe what you said in your guarantee and take you up on it.

Don’t get angry with those folks. Returning the product is their right — and part of your cost of doing business.

(Ed. Note: Bob Bly is a freelance copywriter and the author of “The Complete Idiot’s Guide to Direct Marketing” (Alpha Books). He can be reached at www.bly.com or by e-mail at rwbly@bly.com.)