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?

If your business isn’t totally irrelevant or focused on such a tight niche no one would think of considering your business model, you do have to worry about the top players in your field. Those strong companies owning huge chunks of your market’s share and having dizzying budgets to play with in each department. While you choose field related events carefully, trying to maximize exposure and awareness and leads, they can go to all of them and be one of the big sponsors.

But is this reason enough for you to fear them? I’d say no and explain why based on an example. Company X is relatively a new comer in a certain segment of the software development market. An important partner of theirs tells them about this huge event they should take part in. Attendance isn’t cheap at all, but there are major benefits. They’ll have a nice presentation that can target one third of the even visitors, they have a nice booth and some promotion from the event organizers and a number of complimentary invitations that they can send out to their potential customers. Sounds like a plan! But which are the downsides? The largest player in this segment is also attending. They have about 10 presentations, not just one, strong promotion and great placement. Company X therefore decides to attend the event, but not to use the available invitations.

Company X thought that, by not inviting potential customers in the first place, they will not be exposed to their competitor’s solution. But as it is an important event, what happens if they do come anyway. They will still be reached by the competitor’s message. But instead of hearing it while focusing on finding out more on the alternative the company making the invitations has to offer, there will be no special interest in one product or the other.

Could they have planned something better? They had two choices: either not attend, as spending an important sum without having all the benefits is a bit of a waste. Or, if they attended, use the invitations. It is better to address a public that has already heard of you and, moreover, attends a certain event at following your invitation, than trying to convince those who have no idea who you are that you’re better than your competitor. Moreover, when inviting potential customers, the company can also make appointments for one-on-one meetings.

Competition is a factor one should always keep a close eye on. It should never be feared, because fear leads to bad decisions, such as running away and hiding. If you cannot be a mighty strong player, then play smart. A message in itself is more important than the number of times it is being repeated. One clear, powerful and very attractive presentation, backed by easy to spot, measure and compare benefits, is enough to stand tall among dozens of other marketing schemes.