Money back guarantee can be a great strategy to increase your conversion rate. However, most of the businesses that consider this strategy feels like it’s too risky as they are worried to get asked for refunds from the majority of their customers.
Yes, there is always that risk, but the truth is that when someone is satisfied with their purchase, they are not going to think about asking for a refund, even if the option is available.
In this article, we are going to show you how to provide a money back guarantee without getting a ton of refunds.
Hi there, and welcome back to Serendipity Marketing. We're a digital marketing agency with a mission to help small businesses grow by applying psychology to their marketing strategies.
Before we get started, please go ahead and follow us on LinkedIn, Facebook, or Instagram.
So, let’s get straight to the point.
Create the best customer experience
Here's the first thing that people don't tell you about moneyback guarantees. Most people do it just because they want to increase their conversions but in reality, you should be providing moneyback guarantees whether you have a physical product, a software, or a service because you want to create the best user experience possible.
Just put yourself in. the customers' shoes. If you're not happy with something, you’ll probably want your money back. We know we would and that's why you should provide a money back guarantee. Of course, you do it to boost your conversions, seeing how many people go from being a visitor into a sale or a lead, but still, you want to make sure you're not just doing this for the conversion aspect but you're doing it because you want to provide the best user experience.
If you look at some of the best companies out there like Amazon, if you're unsatisfied with anything, they'll gladly take the product back and in exchange, you know you get the money back so you know there's not much of a risk.
And this increases the level of confidence and trust between customers and the brand; reason why people keep going back to Amazon.
So now let's get started with some tips that will help you generate more sales by providing the money back guarantee and of course reduce how many refunds you're getting.
1. Build an amazing product or service
The first tip we have for you is to build an amazing product or service. If your product isn’t good, you should get a lot of refunds because it sucks to be taking people's money and duping them out of their cache. If your service isn’t good, people should also be requesting their money back.
But really take the time and energy to build an amazing product or provide an amazing service because if you do that what will happen is that people won't just buy from you, but they'll tell others, their friends, their family about the experience they had with your company and they're going to be much more likely to buy.
And once again, if your product or service is amazing, people won’t even think of the possibility to ask for a refund, even if you are offering them the chance to do so with your money back guarantee, as they will feel fully satisfied with their purchase.
2. Provide a larger money back guarantee
What we learned over the years is that classical 30-day money back guarantee could be a 40-day, that could be a 45-day, or even a 60 or 90-day money back guarantee.
You can pick the timeframe that you prefer, but what we found out when we did an AB test on a 30-day moneyback guarantee versus a 60-day moneyback guarantee is that we generated around 7% more sales with the 60-days.
That’s simple. People thought something like: “Oh wow! They really believe in their product or service because they're not willing to just back it up for 30 days but they're willing to back it up for over 60 days.”
So, by providing more time, what you'll find is that more people will convert and we also found out that our refund percentage stays the same.
So by increasing our window from 30 days to 60 days we didn't get more refunds. Instead, we just got more sales.
Alright, now before we move on with the next eCommerce marketing strategy tip, have you ever thought about how much you should invest in marketing to generate constant business growth? Click the button below to calculate the ideal marketing budget you should allocate for higher visibility, engagement, and profit.
How much should you invest in Digital Marketing?
3. Ask for feedback
If you’re a physical seller like an eCommerce store, make people ship back the product to get their money back. If you're going to give some of their money back, you should get your product back as well and what you find is that a lot of people will want your product.
They were just hoping to get their money back without giving you back the product but, by doing this, you'll also get fewer refunds.
Now, if you have a software-as-a-service, don't just let people cancel and get a refund by just clicking a button. Make them email you or if they're not going to email, have a form on your website that makes them leave a reason.
Ask them why they're canceling, why they want their money back, and not just a word or two before they can click the “I want a refund” button. Make them leave at least a few sentences.
This will give you meaningful insights into why people want a refund and you can then take that data to make your product or service better.
Conclusion
Everything is an optimization process that will take you from point A where you’re starting to point B where you want to be.
Following these 3 steps will help boost your conversions. You can do it with whatever product or service you offer. Even with a physical product.
If you need help with growing your sales or optimizing your marketing process to grow your business in terms of visibility, engagement, and profit, contact us today and speak with one of our digital marketing experts to see how we can build the bridge between the point you’re standing at right now and your goals.
