5 things business owners should know about giving refunds – money back guarantees

In business, there are a lot of things that happen every time someone with money and in need of a particular product or service meets with another, who is willing or can be convinced to charge a certain amount of money to fulfill that need.

Money to business, promises to customers

Money exchanging hands is one of those things.

Giving the customer what’s promised is yet another.

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In normal circumstances, it should remain that way.

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For the buyer, that means exchanging a certain amount of money for a product or service and not going back to the seller demanding for the money they paid him.

What your customer buys

What they receive should be so good that the thought of returning it doesn’t cross their mind.

Even if it does cross their mind, the product or service should be good enough to calm them down and let them see and appreciate the value of what they’ve got.

Things never always work like this though

And it’s not because of the fault of whoever is selling – and sometimes not because of the fault of the customer either.

But one party (usually the seller) often triggers something in the customer that emboldens him to go back for his money.

Situations like this sometimes arise because of a simple misunderstanding or lack of preparedness on the part of the customer – before and immediately when they make a purchase.

Some people are so afraid to part with their money, thinking of the worst case scenarios even when they are standing next to a seller who clearly understands their needs and makes a promise to take care of those needs.

So sellers must think of ways to help customers like these take money out of their pockets.

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And they have many ways to do that.

Money-back guarantees is one of those ways

If you don’t like what we sell you, bring it back for a full refund, some promise.

Others will only give you back a portion of what you paid them.

The customer is usually given a limited window of 1, 7, 30, 60 or even 90 days to act. Past that window, they can’t get a refund (though some businesses are experimenting with lifetime guarantees).

And every money-back guarantee has a set of its own conditions made by the seller who usually should explain them to whoever buys from him.

So, how can you benefit from all this as a business owner?

Buying something knowing they can get a refund helps the customer buy with more confidence.

You, as the seller also benefit in two major ways: you spend little time and energy on each transaction and two, it helps you sell more.

What should you take away from all this?

  1. Create great products and services

Let this be your first weapon to ensuring the money comes in and sticks.

Let refunds and other types of guarantees be secondary.

Your primary goal is to create something your customers will love love love love.

  1. Offer a money back guarantee only if you are serious about it

There’s nothing so irritating as someone making a promise to you only to get cold feet when it is time for them to act.

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If you don’t want to offer refunds or don’t even want to entertain the idea, let your customers know.

Yes, telling them this will demand the same courage from you as it demands from the seller who throws all fear out of the window and goes ahead to come up with a reasonable refund policy.

  1. Be very clear about your policy

Explain everything now when you and the customer are all smiles.

Don’t try to do it only when they want their money and they force you to be on the defensive and make you look real real bad.

Make sure your customer understand even the simplest details about your policy.

The best way to do that is to start by making your policy simple, cutting out as much jargon as possible – and placing it somewhere they can find it anytime for example linking to it from the footer, start here, about us or FAQ section of your website.

  1. Don’t waste the time of the customers who really deserve their money back

Just give it to them fast if that’s all they want (they don’t care about any alternative solutions you might have for them).

  1. Don’t worry about getting a flood of requests for refunds

Spend more than enough time creating great products or services, building trust and crafting a great refund policy.

When you do all this, you won’t have to worry about this bit at all even when some of your customers call or email you demanding back their money.

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