Last updated on March 7th, 2021. Posted in Additional Business Ingredients.
There's quite a few misunderstandings about setting up a money back guarantee, refund policy, or what's sometimes called a risk reversal. Here, let's uncover a few of the biggest ones.
Here are links and resources mentioned in today's video. Enjoy!
Every business should not only have some kind of money back guarantee, but they should shout it from the roof tops and make it loud and clear to their potential customers. Yet many don't. Why?
Fear. Business owners are fearful that too many customers will get their product, use it, and then return it...essentially gaining use of the product for a short period of time for free.
Small business owners are too paranoid! For nearly all honest, genuine businesses, refunds are negligible. A non-issue. And yet if you're still afraid or nervous, you'll just have to do it and trust that you won't get many refunds.
Try it for 30 days, 60 days, or 120 days and see what happens.
In fact, you should be shooting for as few returns as possible. If you're getting requests for refunds, it doesn't mean that customers are trying to rip you off...it means that your product isn't delivering on the promise you made.
Further, if you're offering premium products that come at premium pricing (which caters to a specific segment of the market), then you won't get any requests for refunds because customers are trying to scam you.
At the premium end of the market, customers don't care about price. They aren't price sensitive. Instead, they want the promises that your product is making.
Finally, it's important to note what a money back guarantee or refund policy is. There's a reason why it's sometimes called a "risk reversal" -- and that's because by design, it's meant to reverse the risk. In any normal financial transaction, it's the buyer who's taking the risk right?
After all, they're the ones parting with the money, right?
What a properly structured risk reversal does is removes the element of risk from the equation. Imagine a strong, powerful money back guarantee that maybe said something like, "Try our product for a full 60 days...and if it doesn't deliver, we'll refund you 100% and buy you our competitor's product!"
How could a potential customer say no to that? Of course, the key is to make damn sure that your product delivers 500% more than it originally promises...guaranteeing that your customer is bowled over, in love with you, your business, and your product...
...and the thought of asking for a refund would sound repulsive to them. That's the key!