Guarantees are a hot topic when it comes to product purchases. I get asked often by my students if they should offer and advertise a guarantee or refund policy.
The Evolution of Guarantees
Traditionally, online information product sellers advertise guarantee periods ranging from a year to even a lifetime. The philosophy behind this approach was to minimize the number of refunds by making customers forget that they had a guarantee in place. Or it made them feel safe knowing they had the opportunity to get their money back if they were ever dissatisfied. However, this strategy is not always feasible due to restrictions imposed by merchant account providers.
Merchant account providers play a crucial role in determining the duration of guarantees. While most merchant accounts REQUIRE you to have a refund policy, they are often cautious about extending liability periods, which could potentially increase the seller’s risk. As a result, they typically prefer shorter guarantee periods.
The Preferred Guarantee Period
Most merchant account providers insist on a minimum refund/ guarantee period of 30 days after the sale or delivery of the product. However, they usually have a refund/guarantee cut off of 90 days, meaning that you are not able to issue a refund back to the customer past 90 days after the sale.
So, that makes it easy to go with a general 30-day guarantee period. Within this timeframe, customers should be able to make an informed decision about the product’s suitability for their needs. It puts some of the responsibility on the customer themselves to take the action and try the product. And if they don’t ask for a refund in the time frame, it is not your (the merchants) fault.
Interestingly, transitioning from a longer guarantee period to a 30-day money-back guarantee did not have any significant impact on sales for me. In fact, there have been instances where I released a product without any guarantee mentioned, and it did not significantly affect sales either way. However, reintroducing the guarantee led to a marginal increase in sales, which supported us keeping that guarantee in place.
The Importance of a Refund Policy
In my opinion, and in the opinion of most merchant accounts, it is important to offer a refund policy to instill that trust and confidence in your customers. It’s worth researching with your merchant account what their preferred refund policy is and stick with that. Align your product’s performance with what your sales letter or video promises, and you will witness a reduction in the reliance on your guarantee.