Should You Offer a “Money Back” Guarantee?

Should You Offer a “Money Back” Guarantee?

Ellen Rohr
Contributing Writer
Bare Bones Biz

“I want my money back.” 

Gulp.  What happens when a job goes “south,” and you and your customer are at odds with each other?  It can be challenging to communicate successfully with people we know and love.  When working with clients who have a problem, tension often runs high and communication can break down.  However, you can prevent the last minute bail out, “OK, fine, I will give you a refund!”  Or worse, “See you in court!” 

Though this may sound counter-intuitive, offering a “Money Back” guarantee can help you do that.  I recommend a refund policy that goes like this:

100{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} satisfaction or 100{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} money back.

No small print.  No loopholes.  Just be prepared to deliver…or give them their money back if they are not pleased.  Vow to resolve every customer upset to the customer’s approval, including a full refund, it that’s what it takes.

Here’s how to offer a powerful “Money Back” guarantee without shooting yourself in the financial foot.

1. Put Some “Money Back” into the Budget. 

When you create your budget, add an account that reads “Customer Satisfaction Costs.”  This is an expense category for “Money Back” or dinner tickets, carpet cleaning, whatever, that you give to customers to correct upsets, or just to make them feel loved.

2. Make Sales that Make Sense.

If you have to bend over backwards to get the sale, that customer may be hard to please throughout the project.  Don’t work too hard for a sale.  Take care to ask good questions and listen.  Offer sound options and solutions to their unique problems.  Layer on the love.  Charge what you must to make good on your promises, even if you run into a few hiccups.

3. Set the Expectations. 

Put the scope of the job in writing.  Take a video of you and your customer agreeing to the deal points.  Keep simple invoices and agreements with you so that you can “ink” the deal and the change orders when you come to agreement.  No one expects a miracle, so tone down the hyperbole.

4. Make Good on the Promise.

Take every customer concern seriously.  Thank them when they let you know that they’re unhappy.  Try to find out what happened.  Ask them how you can make it better.  Then, do as directed.  And, give them a full refund if that’s what’s required.  The good news is, you will rarely have to do this (in my experience, that’s less than 2{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} of the time.)  Usually, you can get back on track, if you catch the problem soon enough.

NOTE!  This Approach May NOT Work…

You may have too much on the line financially in regards to direct costs to make a blanket “Money Back” promise.  If you build large custom homes, for example.   In that case, it makes sense to build payment points throughout the production, to keep cash flowing and to spot dissatisfaction before the job is finished.  A no-qualifications “Money Back” guarantee works great if reversing an average sale won’t sink the company.  (Remember, I am not a lawyer, so feel free to consult yours.)

Start…at the beginning. 

Start with clear expectations and a formal system for bringing jobs in on-time, to bid, to grateful applause.  Or, at least a smile and a final payment check.    A “Money Back” promise is just a part of this overall system, which can include friendly phone scripts, consistent, hands on technical training, low-pressure sales procedures and sound pre-, during- and post-job checklists

Xo$, Ellen