Advice About Refunds and Guarantees

A guide to the realities of customer service—the good, the bad and the ugly

by Dennis L. Prince
- Nov 16, 2009

In the quest to provide unrivaled customer service, sellers often proudly announce to their shoppers, "100-percent satisfaction guaranteed or your money back!" While this is certainly an effective and admirable policy to uphold, helping to ease a customer's potential anxiety about purchasing in a virtual setting, it sometimes brings a potentially detrimental effect: It presents an open door for fickle shoppers, and even abusive scammers.

As you might suspect, refund and guarantee policies require some careful check-and-balance methodology. As you consider whether you'll offer this sort of no-risk promise to your customers, be sure to recognize the good, the bad and the downright ugly aspects of such a well-meaning policy.

The good: Show total confidence

In a virtual sales setting, there's nothing more reassuring to your customers than when you vow to stand behind everything you sell. Even though purchasing goods online is now the norm, there are plenty of shoppers who are still a bit sheepish about buying items from a distance, not having had a chance to physically inspect what they're purchasing—not to mention the uncertainty of buying from a total stranger in cyberspace.

The remedy to ease a hesitant buyer's concern is a total customer satisfaction guarantee. It's often just the ticket to quell online shoppers' anxieties, while effectively wooing more customers to make a purchase. Therefore, a clearly stated refund and guarantee policy will give your customers a clear picture of how you conduct business, what they can expect from you and what you'll expect from them (regarding any conditions of your guarantee). Consider a policy like this:

All items are guaranteed to be as pictured and as described. Returns are accepted and refunds gladly given upon original item receipt and inspection. Please contact us if you have any questions about an item you have received.

As you can see, the above sample policy indicates that you're first guaranteeing what is offered is accurately depicted, by image and in textual description. It's then made clear that refunds are given, but only upon receipt of the original item (which will be inspected before a refund is given). Lastly, the policy encourages customers to make contact to discuss any matter of potential dissatisfaction.

A simple policy statement like this works to establish you as a businessperson who's in control, understands transaction management and is committed to delivering a win-win transaction every time, with no hidden terms or unfavorable loopholes. As a result, you'll appear committed, conscientious and customer-focused—all the things that work to endear you to shoppers and help boost your online sell-through rates.

Some buyers are prone to 'try' items then quickly decide they don't want them 'just because.'

The bad: Enabling looky-loos

Have you ever purchased something from a store, unsure if you'll actually like it while confident you can easily return it if just doesn't tickle your fancy? It's a great sales policy to have at your disposal, yet it's the same interpretation your online buyers might assume and attempt to take advantage of when you offer cheerful refunds "for any reason, no questions asked."

Some buyers are prone to "try" various items in the privacy of their own home then quickly decide they don't want them "just because." Then, there are buyers who won't utter a peep about a purchase until a month or more after the transaction has completed, suddenly springing up to proclaim their dissatisfaction and desire for their money back. Even more frustrating are those buyers who have "found another one just like it, only cheaper" and would like to return that which they bought from you.

Suddenly, your admirable guarantee—one without any stipulations or pre-conditions—has become your unintended liability.

The ugly: Buy-and-switch scams

Yes, this is where it truly gets ugly. While whimsical buyers may test a seller's patience, it becomes outright maddening when a scheming buyer seeks to exploit a good seller's well-intentioned refund policy by way of the old buy-and-switch dupe. Some buyers are seeking out such policies to secure free "upgrades" to their goods.

Upon receipt of your item, a sneaky buyer may attempt to return a lesser quality version of what you've just sold to them, while claiming it's the piece they received from you. Head this scam off quickly by reiterating all returned goods will be inspected (for originality) before a refund is granted. To this end, be sure you can clearly identify the exact items you send out via irrefutable images, serial numbers or other distinguishing characteristics.

It becomes easier to provide a guarantee when the buyer is made equally responsible to understand an item's condition at the outset

The solution lies somewhere in between

So the balance you must strike in your return and refund policy is that which offers reasonable protection for your customers and for yourself. Here's how:

  • Always provide full disclosure of an item's details and characteristics, along with high quality, multi-angle images. It becomes easier to provide a guarantee when the buyer is made equally responsible to understand an item's condition at the outset—there would be little to quibble over later.
  • Sharpen your guarantee policy to ensure it won't be subject to misinterpretation. Plainly spell out return requirements, such as the duration of a return privilege ("within seven days of receipt"), any conditions of a return ("must be received in same condition as shipped" and "subject to inspection"), and when the refund should be expected ("sent within five days of return receipt").
  • Make note of any attempted scammers for future reference and report such malicious deeds when selling on hosted sites.
  • Poll your customers on a regular basis to see how well you're representing your products and—especially in light of a return request—why did the customer return the item?

So while it's always good business to offer refunds and guarantees to your online customers, there's never anything wrong with tightening up your policy in a reasonable manner to ensure that you won't get mired in counterproductive "return syndrome."

About the Author

Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay…and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues.

Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.

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