« The Traffic Secrets 2 Controversy | Home | Power Marketing: Offer More Than One Product Option »
Here’s A Response Booster: Offer A Money-Back Guarantee!
By Michael | July 22, 2008
One of the most common mistakes that I see many beginner to immediate level marketers make: They don’t offer a money-back guarantee on their products.
Most of the time, this is due to being afraid that people will take advantage of them and ask for refunds. This can be the case if you’re selling a poor quality product.
But refund requests are very rare if you are offering a product that leaves your customers feeling like they are getting more than their monies worth.
You see, I used to worry about offering money-back guarantees too when I was early into my information marketing business.
I started out by selling downloadable e-books to massage therapists. It was an easy market for me to go after, because I had started my first offline business in that industry and had experienced a lot of success there.
The first sales letter I wrote for that product didn’t mention anything about a money-back guarantee when the product was launched.
Almost immediately, I had several prospective customers e-mail me and ask if I offered a to a money-back guarantee. It was understandable because I was charging $59 for a downloadable e-book, which seems like a lot of money for some massage therapists.
After much debate, my former business partner and I decided to start offering a money-back guarantee. While the number of refund requests we got increased, the number of orders we got doubled!
What is a typical refund rate?
If you are offering a quality product, look for a refund rate of around 1-2% for physical products and 8-10% for downloadable products.
Downloadable products will have a higher refund rate because you will get “refund vultures”. That’s a pretty good description for those people that will order your product with the intent of immediately asking for refund so they will get your product for free.
The good news is by offering a money-back guarantee you should see your sales increase enough that the additional refund requests will not hurt your total sales.
Think about it: If offering a guarantee could double your sales, then why would you care that 8-10% of your total sales were refund requests? You are still enjoying a significant increase in your sales!
Here’s another interesting point about money-back guarantees: The longer the guarantee, the less likely your customers are going to use it. Studies have shown that the more time a customer has to review and make a decision on keeping your product, the more likely they are going to keep it.
Let me give you an example. Suppose you buy a $200 marketing book that comes with a two-week guarantee. If it takes almost a week to arrive by mail, then you only have a week left on the guarantee.
Aren’t you going to be extremely motivated to check out the book and you can make a decision if you’re going to keep it or not? Of course! You feel like you make a decision before you run out of time, get stuck with the book, and can’t get your money back.
Now suppose the same marketing book came with a one-year guarantee and it still takes a week to arrive by mail.
How much pressure would you feel to review the book if you knew you had another 51 weeks left on the guarantee? The answer is practically none. So, you take your time reviewing the book. You might even set the book aside because you’re currently reading something else.
Make sure your money-back guarantee is written in easy to understand language.
You don’t want to confuse prospective buyers by using a lot of mumbo-jumbo or Ph.D.-sounding language. Keep it simple and easy to understand.
If you are not offering money-back guarantee on your products already, then it’s time to start doing it. Your bank account will thank you!
To your success,
Mike Humphreys
![[Post to Twitter]](http://michaelhumphreys.com/wp-content/plugins/tweet-this/icons/tt-twitter.png){kind=icon}
Topics: Uncategorized | No Comments »