Should You Offer Money-back/ Warranty Guarantee?

Business Ignite: Should You Offer Money-back Warranty Guarantee

Giving customers peace of mind by providing risk-free or money-back guarantees for your services can be an effective way to get a competitive edge. Whether you opt for this strategy should depend on what kinds of offers are commonplace in your industry.

If most competitors offer such conditions, it would pay off if you incorporate this strategy as well. On the flip side, customers can exploit it by simply exercising their rights and causing a nuisance to your cash flow! Ultimately, it comes down to making the right decision that makes sense based on where and how you’re selling products/services.

Risk-Free for the Service Industry

Customers love risk-free and money-back guarantee offers. So, if you are selling products or tangible goods, it makes sense to offer money-back to reduce consumer risks if it fails to deliver its function.

But what if you are selling services?

It is often impractical to refund money to customers if you’ve already rendered services (unless you failed to deliver the agreed outcomes or breaches industry standards)

The solution is that it depends on your type of industry. Some service providers offer a 7-14-30 days termination clause, while other industry such as Legal, Accountants, and Architects services doesn’t have such common practice for their customers. It is a matter of executive decision and whether it would work for your business. Overall, a money-back guarantee is good to have but is not mandatory.

Alternatively, you could offer a low-price service to get your customers to try you out. If the business relationship doesn’t work out, there are no hard feelings about it. After all, it is also in your best interest to confirm that they are not a good fit for your services. Regardless of your decision to offer a money-back and risk-free Offer, we suggest that you implement some form of conditions to lower the buyer’s risk.

Best Practice When Offering Money-Back Guarantee

Firstly, clearly define what the money-back entails – this could include a 7-14-30 cancellation period, or a complete money-back guarantee if results cannot be achieved – so that there is no confusion about what is expected from both parties. Also, ensure that the terms and conditions surrounding the money-back guarantee are clear and easy to understand as well as reasonable time frames for refunds/returns.

Summary

Ultimately, it comes down to making decisions that make sense based on where and how you’re selling products/services. If you are selling products or tangible goods, it makes sense to offer a money-back guarantee to reduce consumer risks. On the other hand, if you are selling services, it may be beneficial to offer a risk-free trial. To learn more about giving your customers peace of mind, join our mastermind group and access our exclusive resources.

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ABOUT THE AUTHOR

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Victor Kon

Victor Kon is a “business builder” entrepreneur, trusted business advisor, and catalyst to your success. He helps entrepreneurs optimise, automate, and grow businesses that can run without heavily relying on sweat equity. With over a decade of experience running successful businesses in a multitude of sectors, Mr. Kon now utilises the expertise he garnered in those endeavours to help others achieve the same success in their ventures. Read More.

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Victor Kon​

Victor Kon​

Victor Kon is a "business builder" entrepreneur with over a decade of business experience. He is a Certified Business Advisor and a Certified Practising Marketer. He helps business owners optimise, market, and grow their businesses that can run without relying on sweat equity

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