How Money-Back Guarantees Can Make or Break the Sale

Harmony Major

Your product or service could be compelling, your price amazing, and your sales letter "hypnotic" ... but if your satisfaction guarantee looks shady, your prospects are out the door.

The wording, the structure, and the terms of your guarantee can make or break the sale, and are a direct reflection on you and your company. What is your money back guarantee saying about YOU?

Let's take a look at three sales-repelling no-no's from the consumer's perspective, before we get into the legalities:

NO-NO #1: Putting important clauses in parentheses, or burying them in the copy.

Watch what terms you put in parentheses. Even innocent clauses referred to in this way can give your prospect a feeling of underlying "shadiness." For instance, you might say:

"If you're not overjoyed with XYZ Hair Care Product, simply return it within 90 days (with all of the stay fresh seals in tact, all jars unopened, with original packaging, and in resalable condition), and we'll refund 100% of your money with no hassle!"

No hassle, eh? Could've fooled me. This guarantee sounds like the merchant is trying to pull a fast one on the consumer. It gives off that "Oh yeah, by the way, this isn't really that important, but I just thought I should mention it, I hope you don't mind..." vibe that screams "scam alert!"

Be up-front about the terms of your guarantee, and you'll reduce refund and return disputes later on down the line.

NO-NO #2: Offering the bare minimum guarantee term.

30 days appears to be our industry standard for the minimum term of a guarantee, although I've seen a 15 day money-back guarantee before (on a shoddy product).

Offering such a short-term guarantee can make prospects feel that you're afraid they'll realize your product is worthless given sufficient time to try it out. For instance, the 15-day guarantee I saw above made ME think that the merchant was hoping customers would realize the poor quality of the product AFTER the guarantee term was over, and/or forget to ask for a refund in time.

Also -- especially with information products -- some people may buy immediately, and not USE (or read) the product until AFTER the covered 30-day period. Why? They may not have the time, and are simply trying to purchase before a possible price increase.

I've put off purchasing products with 30-day guarantees quite a few times, as I wouldn't have been able to read them within the first month that the guarantee covered. Then, I forgot to go back and order the product, (or decided I didn't really need it after all), and the merchant lost that sale.

The moral? Reward impulse shoppers! Don't have your guarantee, of all things, give them a reason not to buy your product right away. If you're like most Internet merchants, you already have a hard enough time convincing a good percentage of your prospects to buy. ;-)

NO-NO #3: Putting ambiguous clauses in your guarantee.

I ran across a website that assured me that, with their service, my success was "almost guaranteed!"

Hunh?! Seem a little off to you?

I know there's a high "duh" factor in this one, but it must not have been as obvious to this clueless merchant.

We as business owners can get so caught up in trying to protect ourselves in our guarantees that we forget to take a step back and actually LOOK at what we're saying. My advice? This merchant should focus on what they CAN guarantee, and throw those iffy, credibility-killing clauses out the window.

BUT IT'S *THE LAW!*

Here is a summary of what the U.S. requires when offering guarantees (referred to as "warranties" below) on consumer products. (International readers, please investigate these in your own locality.)

TIP: The info below only applies to you if you're selling CONSUMER products -- not commercial -- and applies to written (not oral) warranties.

Warranties are your promise, as a merchant, to stand behind your product. The law recognizes two types of warranties: implied and express. There are also two types of implied warranties.

(1) The implied warranty of "merchantability" is a merchant's promise that the goods sold will do what they are supposed to do, and that there is nothing significantly wrong with them.

The implied warranty of "fitness for a particular purpose" is a promise that you make when your customer relies on your advice that a product can be used for some specific purpose.

(2) Express warranties, on the other hand, are promises that you make (voluntarily) about your product, or about your commitment to remedy the defects and malfunctions that some customers may experience. In other words, a satisfaction guarantee of sorts.

For more information and examples of these terms, see The Federal Trade Commission's (FTC's) "Understanding Warranties" article at: http://www.ftc.gov/bcp/conline/pubs/buspubs/warranty/undrstnd.htm

The FTC applies the following requirements to businesses who choose to offer a written warranty (but offering one isn't required). There are three rules companies must follow when offering written warranties on consumer products over $10-$15 (the rule being adhered to is dependent upon the price of the product.)

The FTC's Rule on Pre-Sale Availability of Written Warranty Terms requires that written warranties on consumer products costing more than $15 be available to consumers BEFORE they buy. The rule has provisions that specify what retailers, including mail order (*this category includes Internet purchases*), catalog, and door-to-door sellers, must do to accomplish this. For details see http://www.ftc.gov/bcp/conline/pubs/buspubs/warranty/making.htm

There are NO time limitations on implied warranties, (which are automatically required and enforced by the government at the point of sale). However, the state statutes of limitations for breach of either an express OR implied warranty are generally four years from the date of purchase.

This means that buyers have four years in which to discover and seek a remedy for problems that were present in the product *at the time it was sold.* Obviously, this doesn't cover damage due to misuse, natural wear and tear, etc. It simply states that the product must do what it was intended to do for the average "life" of the product.

If you choose not to offer a written warranty, the law in most states allows you to avoid an implied warranty for that product. In order to do that, you need to make it perfectly clear to your customers, (in writing), that you won't be responsible if the product malfunctions or is defective. You must *specifically indicate* that you don't warrant "merchantability" (see the definition above), or specify that you're selling the product "with all faults," or "as is."

TIP: If you offer a written warranty for a product, you MUST also offer implied warranties on the product.

A few states have special laws on how you need to phrase an "as is" clause, while other states don't allow the sale of "as is" consumer products at all. (For specific information on how your state treats "as is" disclosures, consult your attorney.)

TIP: You can't avoid responsibility for personal injury caused by a defect in your product, even if you sell it "as is." If it proves to be defective or dangerous, causing personal injury to someone, you still may be liable for damages. Selling the product "as is" doesn't eliminate THIS liability.

IN CONCLUSION...

As you can see, there are a lot of things to consider when you're constructing your money-back guarantee -- I'll bet even more than you bargained for. ;-) Just remember the importance of offering an ethical, easy to understand, law-abiding guarantee, and you'll surely be rewarded with increased sales!

Harmony Major is considered one of the Internet's top marketers, and is the owner of the *new* Ready, Set, PROFIT! e-Magazine. Visit now to discover a FREE, fool-proof, 3-step strategy that can help you multiply your website profits EACH MONTH, in just a few minutes a day. Go to: http://hypertracker.com/go/emag/501sub/