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THE  MONEY  BACK  GUARANTEE 

   A few months ago I purchased a dining room table from a large furniture retailer in Sydney. After delivery, I discovered I could not completely push my chair in because the skirting around the edge of the table came down so low that it would rub against my legs.
  I contacted the owner of the furniture store and he came and inspected my table. He could not push his chair in either. He said to me that he would not give me a refund nor exchange the table. He did offer to shorten the chairs for me, even though there was nothing wrong with the chairs. I declined his offer and instead contacted a carpenter who was able to increase the height of the table.
  This episode got me thinking. If I was selling this dining room table and chairs, what would I do in this situation? I would certainly offer the customer a refund or exchange since preserving my company's reputation is more important than preserving a sale. Do I really want to be paid for providing goods or services that my customer does not like?
  There is certainly no law that states you must provide a money back guarantee. Consumers are protected by the Trade Practices Act and the Sale of Goods Act. If a consumer receives goods or services which are faulty then they are entitled to a refund, replacement or repair. This is the choice of the vendor, not the consumer. If a consumer makes a purchase and is subsequently unhappy with the purchase but the product or service does what it was demonstrated to do, then the business is not obliged by law to do anything to assist the consumer.
  You might well ask     what if I offer a money back guarantee to all my customers and my sales are reduced considerably because of a large number of refunds. Firstly, this should identify a problem in your business which needs addressing. Why are your customers asking for their money back? This is one of the great advantages of the money back guarantee     instant feedback. Just imagine you had ten customers who were not happy with the goods or services you provided. They know they can't get their money back so they just accept what they have received but vow to purchase from someone else next time. These ten customers might have had very similar complaints. Without a money back guarantee, it may take a long time, if at all, before you discover why these customers are unhappy.
  Secondly, it is actually rare for anyone to take advantage of your guarantee. Your customers have purchased goods or services from you because they fulfil needs or wants for them. Only in the event of your products or services being inadequate in some way are your customers likely to request their money back. Even then, your customers still need to go to the trouble of returning the goods, explain to you why the service was unsatisfactory, or meet some other condition before you will give them their money back. Of course, occasionally a customer will take advantage of your money back guarantee and return goods without any good reason. However, your business is far more likely to be exposed to shoplifting, burglary, credit card fraud or even embezzlement than the situation of giving customers their money back unnecessarily.
  Have you ever walked into a shop and seen a sign which said, "Choose carefully. No refunds or exchanges accepted." My immediate thought if I saw such a sign would be     if in doubt, don't buy. What if this sign was replaced with another sign which said, "Customer satisfaction is our goal. If, for any reason, you are unhappy with anything you purchase, we will exchange or refund your money." Now, if I saw this sign I would be thinking     if in doubt, buy.
  The sole purpose of the money back guarantee is to take the risk away from the customer. Most companies which sell by direct mail will offer a money back guarantee. You may also see a money back guarantee when products are offered for sale on late night television. When you cannot physically see or touch the goods then the risk to the consumer is perceived to be greater so to compensate for this a money back guarantee is offered. As more and more goods and services are offered for sale on the Internet, it will be increasingly important for businesses to develop a strong guarantee. Your guarantee will increase the chances that potential customers will trust you.
  Did you know that when you offer your customers credit you are effectively offering them a money back guarantee? This is because the risk has been transferred from the consumer to the supplier     just as if there is a money back guarantee in place. The onus is no longer on the consumer to give a good reason as to why they are entitled to a refund. Now, the onus is on you as a supplier to prove to your customer that you deserve to be paid. After all, if the goods or services you provided are unsatisfactory, then you will need to rectify any problem before you are paid.
  Our guarantee at Australian Credit Stationers is as follows:

  If at any time, and for any reason you are not satisfied with the goods you receive, simply return them to us for a full and prompt no questions asked refund.

  This is a very general guarantee. Ideally, your guarantee should relate to the products or services you sell. Your guarantee does not need to be spectacular. It merely needs to be strong enough to encourage your customers and more importantly, your potential customers to purchase from you instead of someone else.
  If a customer wants to take you up on your guarantee, don't be afraid to give him or her what you promise. If you deal with customer complaints quickly and to your customers' satisfaction you will most likely win these customers' appreciation and very likely they will continue to buy from you for a long time to come. They may also encourage others to buy from you.
  When determining your company policy about a money back guarantee, instead of asking yourself, "can I afford one?", you should be asking, "can I afford not to have a strong guarantee?"

 This article is reprinted from Rentons' Business Tips No. 9
© Copyright October 2000 ACS