A deal always happens between at least two parties. One is at the buyer’s end and the other one is a seller. In most cases, we try to strike the balance to protect the interests of both. A money back guarantee serves the purpose. In this article I will tell you how a money back policy is a winning formula today for any business. But there is also a dark side. In this article we will see both sides of this coin.
What is a money back guarantee?
As the name suggests, in this case, companies assure customers that their money is safe. If the customer does not like the product, the company will take back the product and refund the money. This is part of the marketing strategy that can improve business performance. Increasing sales is one of the greatest challenges of business. Therefore, if you are running a business, you should try this.
The negative side
Many customers buy products, use them and later claim the refund. This is not a very common practice but big enough to be recognized. Sometimes customers who damage the product want a 100 percent refund. It is their fault but as a company fighting with a customer is not a good idea. It can damage your image and in the modern era of social media negative reviews are like setbacks. If you want to make business successful, you avoid this risk. Therefore, companies prefer to pay the money back. Whenever you draft a refund policy, you should write clauses very carefully.
Objective and benefits money back policy
Companies give many offers and discounts to customers in order to increase sales in business. In addition many companies also have money back policy in place. The primary objective of this is to make sure customers do not hesitate to buy products online. This is one of the best techniques to increase sales in business. Some of the key benefits include these:
1 – Improve Customer Trust
First of all, this can increase customer confidence in a product or service. If the customer is sure that the money is safe, they start believing in the brand. With time if the quality is good their trust will improve.
2 – Save Marketing Cost
You can save a lot of money if the customer makes a purchase decision fast. A money back policy can help you do this. This way you can focus on other things.
3 – Customer Acquisition is fast
No matter how good your product or service is, it will fail if there are no buyers. Due to this, customer acquisition is among the top priorities of a company. This policy can bring you some initial customers. In the long run, they will only remain with you if you offer value. But it is worth taking risks. At least it is better than keep waiting and exhausting resources.
4 – Unique Selling Proposition
There is no perfect sales formula in business. There are USPs (unique selling propositions) that make sales happen. Due to this, you can assure customers about their money. Many customers will buy just for this one reason at least for trying out a product.
5 – Customer Happiness
How would you make a customer happy if there are no customers in reality. The first thing is to acquire some customers. Easy money back policy can help you do this. In the beginning customers feel happy if they get a good product at a reasonable price. Later on quality and after sales service pay an important role.
6 – Reduce Risk of losing money
Companies can reduce the risk of losing money at the customer’s end. This works as a marketing tool.
7 – More Sales, More Profit
In business if you know how to make profit, it is good. Successful implementation makes it realistic. There are techniques to make pricing right. You should also know how to decide the product price. As a result, you can increase sales in business which ultimately give you more profit.
Common money back options in the market
Apart from many offers and discounts, companies offer these types of money back guarantee to customers. Especially during Black Friday Sale, there are such offers. Some of the common offers are these.
30 day money back guarantee
When you order a product like software, companies offer you a trial period. You can cancel the order if you do not like the product or service. Normally, there is a 30 day or one month window. If the customer cancels the order within the mentioned time, companies provide refunds.
100% money back guarantee
In this case customers get all the money they paid at the time of placing the order. There are no deductions in the name of service charges etc. It is simple, if the customer does not want the product and the company is ready to take it back the customer gets all the money he or she paid. There may be a time limit for these kinds of refunds. Normally the window is small to save company interest also.
What is a refund policy?
There are situations when companies are unable to complete the order due to any reason. This happens in both the scenarios offline and online sale. In this case customers also expect some kind of assurance that their money is safe. As a result, companies create a refund policy. Normally, they publish on the website itself to make sure customers can read it before placing an order.
What is PayPal money back guarantee?
PayPal is one of the most famous payment gateway companies. PayPal also works in many countries seamlessly. Due to and has a large customer base. As there is a famous saying, “With power comes responsibility”. Due to the same reason, PayPal holds the payment for sometime before transferring it into the vendor’s bank account. In case of a fraudulent transaction, PayPal refunds back the money. Due to PayPal money back guarantee, customers also feel safe.
Can you trust every company with a Money Back Policy?
First of all, the internet world is full of fraudsters. Due to this you cannot blindly trust anyone with a money back guarantee. Check the background. You can also check reviews on Google. These days, people are active and share their opinion about products and services. Many companies also seek customer feedback after sale. If it is an old company, you can find customer reviews. If there are no reviews, you can read the refund policy to make sure your money goes in safe hands.
What is money back guarantee with an example?
In simple words, a money back guarantee is part of the refund policy. This is a method of convincing customers that their money is safe. In case of any issue or they do not like the product, there is an option to return the product and claim refund. Here we are not talking about a life insurance policy because of the objective.
In case of a life insurance policy companies offer money back in two common scenarios. First of all they offer it after a specific time interval and second, in case of death of the policy holder.
Is money back guarantee good?
This depends on how aggressive you are planning to push this. If you use it wisely, customers will start believing in your product. This is one of the best marketing strategies for a start up because the brand is new. It takes time to develop customer trust. But I always remember one thing. Startups work with limited resources and if there is no venture capital funding (VC funding) the situation can be complex. In addition, there are other limitations also. Therefore, you need to do the math in advance before pitching it. The best way to write down everything before you start a business.