NFIB

The Single Strongest Offer You Can Make, Part I
04/ 02/ 2002

To give customers assurance of quality, and to convince them that they have nothing to lose if the product you sell doesn't provide a solution to their needs, you should offer a 100 percent no-questions-asked money-back guarantee. In today's and next week's Workshops, Jeffrey Moses discusses what this really means for you, and shows how to put it into action.

Experience shows that customers tend to make purchases more readily when offered a money-back guarantee. Their thinking is straightforward: "If I take this home and don't like it, or if it's inferior in any way, I can get my money back quickly and easily." The key words here are: "quickly and easily." When customers know that they can simply take a product back to the store and return it for the money they paid, they clearly will feel much more confident in making a purchase.

A full guarantee of this type is even more important for companies doing business via the Internet, over the phone, or by mail. So many large, established companies today offer 100 percent guarantees that any organization not offering the same is at a disadvantage. In many ways, the guarantees provided by almost all of the big retailers is a thing of beauty. You don't like the weed-trimming machine you bought at Lowe's or The Home Depot? No problem. Simply take it back and they'll give you a refund without even asking why you don't like it. In fact, I've returned merchandise without even having my receipt! This type of strong guarantee gives customers tremendous confidence, and forces online and mail-order organizations to offer similar satisfaction.

What does offering such a guarantee mean to you? You must be prepared to take back any item that a customer wants to return -- even for the oddest, most illogical reasons. You'll hear comments such as: "I thought it would be bigger." "I wanted it to be really blue. Not this kind of blue." "My car needs some repairs, so I can use the refund." "I changed my mind." Send them back a check, even if the returned item is a little banged up.

This doesn't mean, however, that you need to take back an article that has been completely ruined by wear. You'll need to handle returns on a case-by-case basis, but often you may want to simply refund the money with a smile, even when a customer seems to be taking advantage of you.

To offer a money-back guarantee, you need to project returns into your projected cash flows. Returns vary greatly from product to product, and according to quality. E-tailers selling standardized items such as artist's materials (oil paints, acrylic paints, brushes) experience an extremely low rate of return because customers often have ordered the products before and know exactly what to expect. An e-store selling jewelry, however, should expect higher rates of returns because of the subjective nature of customer appreciation of the product. E-tailers selling books, CDs or business supplies normally expect more moderate returns. Work with your accountant to determine the rate of returns you should expect in your industry. But be aware that you may not be able to accurately calculate the rate of returns for your specific products until you can look back over a year or two. And even then your return rates may change whenever you use new sources for mailing lists and other means of new advertising.

Next week's Workshop continues this topic by discussing exactly what you'll need to put a top-flight returns policy into action.

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