Many companies offer refunds, from retail stores to hardware and software vendors. Everyone adds certain conditions to their refund offer, but it is there, promoted and placed on a visible spot. While some reasons are obvious, others are harder to perceive. Therefore a lists of core benefits is highly important when deciding if and when to offer refunds for your products and services.

  • Earn Trust – a full refund offered to your customers states that you trust your product or service enough not to worry of a mass return situation. They will thus have more faith in what they are buying. On the other hand, you would avoid the false pretense that your product or service is perfect for any type of working scenario. Experience shows everything can be flawed given the right circumstances, incompatibilities are a real issue and you’re not always able to fix the issue on your own.
  • Generate competitive advantages – Providing such a post-sales service and the conditions you impose can turn into competitive advantages, convincing your customers to choose you over a competitor.
  • Save time and money – sometimes, refunding a product is less expensive than trying to fix the issue its use has generated. When a customer contacts your support department, it keeps your staff busy. If the problem reaches the point where after a few weeks you still have not found a solution, a refund my turn out to be less expensive. You have to think of the time they spend thinking about the issue, other employees whose help they need (developers or testers for example) and how many other customers with solvable issues they could be helping in the mean time.
  • Maintain your reputation – There are cases when a problem cannot be solved. If your customer is forced to keep the product or if they are limited to only part of its features, you risk having them recommend a different product or service. Word of mouth is sometimes as important as your clever marketing campaign, and bad reviews are hard to fix. Such negative feedback requires a lot of effort which translates into significant costs. And it is always harder to rebuild a company’s reputation than to maintain it.

What would you add to this list?

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