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

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!

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

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.

Pros: More Sales
Cons: More Refunds

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

Will

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!

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.

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.

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

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...

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.

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.

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.

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".

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.

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.

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.