We recently talked about building a community as a means of developing relationships with your customers. One positive result of having a strong community is the development of trust between you and your customers. With understandable fears of identity theft, establishing this trust can go a long way in making that initial sale.
Two other ways to gain the trust of potential customers is having a clear guarantee and a return policy. Both of these tell your customers that you are willing to stand behind your product. Making sure that your customers know your refund policy before purchasing directly reduces the number of chargebacks you will receive.
Tips:
- Have the guarantee and refund/return policy clearly stated on your site.
Showing the benefits of your product is important. Your confidence in your product is equally important. Make the guarantee a highlight of your site not an afterthought – your customers will appreciate it. - Have the terms of the policy easy to find and easy to understand.
No shopper wants to feel like they are reading a legal contract. Put the terms of your refund and/or return policy in easy to understand language. Make the process to get a refund or make a return as simple as you can. - Make your policies strong.
A merchant/customer relationship is a partnership. You provide something in exchange for something else (money) – both sides of this transaction are equally important. If your customer feels that they are having to take the greater risk in purchasing your product, they will likely move on. For example, one week trial period is a greater risk for the customer than a one month trial period. The longer you extend your guarantee, the stronger it is. If customers feel that they have more time to test a product, the longer and more often they will use it. The more they use it, the more likely they are to keep it. Most refunds happen within the first month of a purchase, longer refund windows do not always increase the number of refunds, some findings indicate that it actually reduces the number of refunds.
One often overlooked side-effect of having a refund policy is the reduction of chargebacks. If you have an unsatisfied customer, they are going to want some resolution. If that resolution cannot come from you, they will seek that resolution from their bank. While both refunds and chargebacks ultimately mean giving the customer their money back there are enough differences to make refunding a purchase more desirable than having a charge disputed by a bank.
Trust is important in buying and selling online. Having strongly worded return and refund policies is just one way to build trust in your company.
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