Offering a money-back guarantee may seem counterintuitive, yet many service providers and online retailers voluntarily provide it to their customers. However, this kind of guarantee can benefit both a business and its customers.
A money-back guarantee is a statement that businesses offer customers if they are not satisfied with the product or service. Companies use money-back guarantees as a marketing technique as it helps offer consumers a sense of security when they are buying from a particular business or service provider.
Such a guarantee usually has specific terms and will address the services or items that apply and the allowable time frame for the return.
If you wonder whether your business needs a money-back guarantee, you are at the right place. Read on as we explain more about the guarantee and how you can create one for your business.
Does Your Business Need a Money Back Guarantee?
Businesses are not required by law to have a money-back guarantee. However, as we mentioned above, such guarantees are suitable for both the customers and businesses.
While there are other ways of attracting customers and building brand authority, an excellent money-back guarantee can help attract new customers too.
It shows them that you are confident in your services or products.
Furthermore, this type of policy can encourage them to buy as they feel protected from common issues such as buyer's remorse. It also prevents them from feeling stuck with a product that they could discover doesn't suit their needs or does not work as they expected.
Therefore, a money-back guarantee can be viewed as an insurance policy that protects consumers when they make a purchase they may eventually perceive as unwise.
If you have and honor your money-back policy, the entire experience could help bolster the consumer's confidence in you and increase their overall customer satisfaction even if they return the product. In addition, it could work positively for your brand image, and customers will be more willing to purchase from you in the future.
Laws Surrounding Money-Back Guarantee Policies
Money-back guarantee laws differ depending on where one comes from. Below we highlight some unique cases according to countries and regions.
The United States
If your business offers a money-back guarantee, you must honor it. The law in the United States will require you to provide a full refund if you advertise a money-back guarantee.
There may be other laws that address money-back guarantees for different states. Therefore, you will have to do your due diligence and check if any regulations apply to your particular state if you plan to offer a money-back guarantee.
United Kingdom
The laws are more specific for the United Kingdom, where a consumer is given a two-week period to inform the seller of their intent to return the item. After that, the business will have two additional weeks to issue refunds.
Money-back guarantees are also to be honored if the item is damaged and will be given after your business receives the customer's item.
European Union
In the EU, customers are allowed a grace period of 14 days. During this time, they can cancel services or return products to a business if they feel unsatisfied.
However, some products are excluded, including digital content and customized or edible items.
Therefore, as a seller, you may need to be more specific and let your customers know which items will not be included in your money-back policy. In addition, you will need to state clearly which products and services are covered and which are not.
What to Include in a Money-Back Guarantee
Creating a refund policy statement should not be difficult. Your language should be clear and precise about the specific services or items that qualify for a money-back guarantee and what the client must do to receive their money back.
Generally, your money-back guarantee should play a part in marketing your business in a positive light.
Some of the Basics of a return policy include:
A Bold and Precise Statement
While some businesses include complex terminology and legal jargon in their refund policies, it is best to have an easy-to-read and understand the policy to eliminate any instances of customer confusion.
Ideally, you should state what your policy is and what the customers should do if they need to use it. Apart from the obvious time limit, you will need to specify any restrictions, hours of information, and contact information they may need.
Terms for Returning Gifts or Customized Statements
Some businesses, such as Walmart, have mastered the art of return policies. If you want a return policy for gifts, you may borrow a leaf from them. Some of the special instructions you could provide for such products or items include:
- Terms for returning accessories
- That you will need the original packaging and receipts
- What they will be receiving upon returning item-store credits or cash.
Shipping Costs
You will need to be specific about shipping requirements and responsibilities if you offer shipping returns. You could choose to provide this information in a separate shipping policy. Some of the issues you will need to address include:
- Whether you offer free shipping
- Will the customer pay for shipping?
- Is shipping free within the same region or state?
Frequently Asked Questions
It is relatively common to see companies with a money-back guarantee with a commonly asked questions section at the bottom of their web pages. Here, the business will provide clear instructions on the conditions and exceptions of the return policy.
The customers will need to click on the questions related to the information they want.
Some of the things you could address in the Frequently Asked Questions section include:
- Return Exceptions
- The brands under your umbrella
- If they can return registry gifts
- How to return opened products
- Returning products to a store or by mail
- Mail-in return exceptions
Where to Put the Return Policy Statement
Now that you know what to include in your money-back guarantee, you may be wondering about the best place to put it on your website.
You may be tempted to hide the return policy in the fine print, but this may be bad for your online reputation management, especially if it brings constant conflict between you and the customer.
Ideally, it would be best to display your policy in places where your customers will easily find it. We explain some of the best places to show your policy below:
- On the Homepage
Many businesses usually include the money-back guarantee on the return policy section at the website footer on the homepage. Therefore, a consumer can easily find it when they need it.
- Product Pages
Another good place to display your money-back guarantee is on the product pages and any other pages that link to your products.
You can make it stand out by adding an icon or stamp that says "Money Back Guarantee" to specific pages.
- Checkout Page
You can also have a clear link to the money-back guarantee in your website's shopping cart or checkout section, as these pages are closely related to your products.
There is an upside to having your return policy placed on the checkout page. First, it plays on the psychology of the consumer as they know that they can return the product if they are not satisfied. Therefore, they are more likely to buy, which will reduce cart abandonment rates for the business. Furthermore, it provides them with the information they need about your service or product.
Drafting Your Money Back Guarantee
Drafting a money-back guarantee for your business does not have to be complicated. Many businesses have adopted the "if…then…" formula. If the item is not as they expect, they are not satisfied, or they do not get the intended results.
There are several types of guarantee covers you can choose from. Some companies even offer a lifetime guarantee on their products.
The general idea is that the policy should be short, precise, and true. Include a reasonable return period, instill confidence in your service or product and ensure the return instructions are clear and do not leave questions.
Cons of Money-Back Guarantees
As you may expect, money-back guarantees have a few drawbacks. They include:
Rip-Off Customers
Businesses put up money-back guarantees to ensure that their customers are happy and satisfied with their products or services. However, so many companies still risk attracting the wrong customers.
Some of these customers have mastered playing the system and could use a product severally before deciding that they do not want it. Thankfully, these situations are a rare possibility.
It Is Impossible to Meet Buyer Expectations
Not all returns are usually a result of a defect. While many clients may be happy with your products, a smaller percentage may never be impressed.
Some items will be returned due to buyer's remorse and not actual problems or defects in your product.
Complicated Accounting and Flawed Money Flow
You may not count a sale if you have a money-back guarantee until the refund period is up. Furthermore, some credit card companies do not allow refunds after 90 days, so this may drag you back if you are in a competitive industry. Therefore, you may need to streamline your operations to deal with issues regarding the purchase price and when a purchase should be considered complete, as failure to do so could mean a money flow problem.
Conclusion
A money-back guarantee policy is beneficial for both businesses and consumers. As you draft one for your business, ensure that you are transparent on all aspects and display it in places they can easily be found by your loyal customers. It should also cover all the details that the client needs regarding the return and refund policy.
Download