Credit Those Money-Back Guarantees

A common practice in retailing is to accept products back for a full refund, even if the product has been partially used. The retailer might insist on issuing a store credit for a future purchase rather than making a cash refund. But retailers know a customer is more likely to make purchases at a store offering money-back guarantees (MBGs).
     Researchers at University of Muenster, Catholic University of Eichstaett-Ingolstadt, and University of Texas-Austin have documented how influential the MBG can be. The MBG affects both the shoppers’ logic and their emotions. At the logical level, it is insurance, letting the shopper know that if anything goes wrong, the cost to make things right will be limited to getting the remnants of the merchandise back to you. “Just bring the item in for a full refund.”
     At the emotional level, the influence of the MPG is assurance. When you, the retailer, offer your customer a MBG, you’re encouraging the customer to have high trust the product will deliver on what’s been promised. The researchers find that this second prong—the emotional—is more influential than the logical.
     Because of the power of the MBG, feature this policy in your marketing. Emphasize the assurance you’re offering, with the insurance angle as a subtheme.
     A MBG is a multi-part promise to your customers:

• What you are promising you will do 
• The rules for deciding if you’ve kept that promise 
• The remedies available to the customer if you fail to keep your promise 

     There’s a fourth part as well:

• How you will answer the customer’s questions about each of the first three parts of the promise. The MBG is one tool for projecting your marketing identity to your target customers. Use your explanation of the guarantee to project clearly. 

     Stay aware of the emotional prong as you analyze what you’re promising and make updates in both the promises and the explanations whenever necessary. There are “serial returners” who use items and then come back to the store asking for a full refund. Survey research finds that many of these consumers do not see what they’re doing as cheating. They’re not consciously attempting to defraud the retailer.
     When you set the rules for MBG returns and give explanations to the serial returners, you’d like to keep them as customers. Show respect, concern, and empathy as you are protecting your business from exploitation, even unintentional exploitation.

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Guarantee with Care 
Present Warranties as Insurance, not Assurance