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It is important in marketing to remove as much risk and friction on the part of your prospects as you can. One of the most common ways to do that is to offer a money back guarantee.
Now there are many different ways and methods for a money back guarantee that you can implement. You can offer things like your standard 30, 60, 90 day guarantees. Another couple options are offering a 1 year or lifetime guarantee. Some companies even go as far as offering double money back.
No matter which way you go with your guarantee, it has become a pretty common practice.
But do they matter when it comes to conversion rate?
In this article we are going to share a couple examples to give you some ideas to test out for yourself to see if it makes a difference.
We had one client that for the longest time didn’t state a money back guarantee in any of their marketing.
While dialing in a paid advertising campaign we wanted to see just how important having a money back guarantee was to their conversion rate in their particular market, so we added a simple 30 day guarantee to the sales page.
The result was an increase in conversions by 26%. A pretty good increase in conversions by just adding some simple language to the sales page.
The philosophy here is simple, as stated earlier. Having this simple guarantee makes the visitors/prospects feel all warm and fuzzy and confident in their buying decision. They know that if they aren’t satisfied they can get their money back. There really isn’t a much more powerful option to remove friction and risk in your marketing.
Of course you need to stand behind your guarantee no matter what you offer.
Another cool case study we have from a different client.
For several years this company had a standard 90 day guarantee on their entire product line. The company was successful in that they had several thousand customers per month that came through their sales funnels and out of those only about 5% refunded.
So what happened when they decided to test out a 1 year guarantee?
Most people would immediately turn their thoughts to the negatives of offering such a long guarantee in that they would assume their refund rate would increase.
In this particular case the benefits far out weighed the negatives.
What we found was that by offering a 1 year guarantee vs the standard 90 day was that the conversion rate of their product DOUBLED. Twice as many people made a purchase.
To put that into a numbers example.
Say you had a 3% conversion rate and an average day one customer value of $200 or $600 in revenue for every 100 visitors.
With the new guarantee you now have a 6% conversion rate or $1200 in revenue for every 100 visitors.
So what happened to the dreaded refund rate from this experiment.
It might come as a shock to hear that the refund rate only went up 3% and we found that the majority of people still refunded within the original 90 day period.
So they doubled their conversion rate while only increasing their refund rate by 3%.
I’d say we hit a winner.
Another example of refund periods that had a positive impact.
We had a client in a relatively small niche online. Since he started his business back in 2008 he had always offered a lifetime guarantee. He was extremely confident in his product and it was one thing that set him apart from everyone else in the market. He was the ONLY one offering such a guarantee.
He has found similar results in the refund rate. The majority of people that refund do so within the first 90 days while less than 1% refund after 1 year from date of purchase.
In fact after thousands of customers he has only had 2 people refund after 1 year.
We hope this sheds some light on taking a hard look at your current refund policy.
Will increasing your refund period increase your results? Does it set you apart from the rest of your market?
Test it out for yourself to see just what kind of impact it can have on your business.
If you would like to see how we may be able to work together to increase your overall results drop us a line at email@example.com