Do Money Back Guarantees actually make a difference?

I have a strange relationship with “money-back” guarantees.  I rarely make use of them, but on some occasions, such as when I dabbled with the Headway theme, I was glad to have one in place.

Do they really help sales pages to convert better?

Maybe it’s living in Germany that has made me blind to such “guarantees”.  You see, German consumer law works the other way around if you buy a physical product on-line.  The shop has to give you your money back if you return the product with a certain number of days.  The number of days depends on a number of factors, but it’s safe to say it will never be less than 14.  And if the item costs over €40 then they even have to refund the return postage.

So on the one hand, on-line stores must inform you of your right to return a product, and they can be fined for not doing so.  On the other hand, they don’t make a big fuss about it because they have to do it anyway.

But even when I’m visiting the UK I’m someone who knows their rights and am quite happy to start quoting consumer legislation if I need to in a high street shop.

Taking this into the on-line world, I see a number of situations that can arise.

German consumer law, for example, allows me to exclude refunds on products where returning them is not possible, eg. digital downloads, but only if the customer actually was sent the correct download.  There isn’t much room to manoeuvre here.  You either offer the correct number of days, or exclude refunds altogether.

Outside of Germany, if I buy something with a license key, then I can see how refunds are not a problem.  If I cancel my contract or even just don’t pay for some reason, then my license key can be revoked and the product will stop working.

For an e-book this isn’t really feasible, so I think this enters the territory of “is it worth it?”.  Just give them their money back!

And for membership sites?  I can see a good reason to “drip” content.  After all, if someone cancels then they have only seen a small amount of content at that point.  They can’t come in, download everything, and then clear off again.

Of course, neither the Beyond Blogging Project or The DIY Blogger works in that way.  You really can come in, read everything, and then cancel again.  BUT these sites do not offer a money back guarantee.  You have to pay for at least one month.

If I ever start a new membership site though, I will seriously consider “drippping” the content, using a plug-in called WP Drip.

So let me ask you some questions.  Does the offer of a “money back” guarantee really make you more likely to buy?  And do you trust the vendor, potentially in a foreign country, to actually hold that promise?

I’ll admit that as much as I don’t like ClickBank for the fact that they charge me VAT on top of the vendor’s price, they do have a good reputation in this department.  I even tried it out, just once.

PayPal also seems to reliable.  In fact, in Germany they have a reputation of being too reliable sometimes when it comes to refunds.  If I put in a dispute then there is a good chance that I will get my money back.

Otherwise, I’d hate to have to discuss a refund with someone at my credit card company for a product that they don’t even understand the logic behind.

For me, in the few cases that I have ever claimed my money back, my gut feeling about the product in advance was that I might need that option.  If I listened to my instinct a bit more, I probably would not need it.

So it’s fair to say, that the only products where such a guarantee has made a difference, I ended up returning anyway.  Turn that argument around, and offering a money-back guarantee on a site may not actually increase sales in the long run.  Any short-term gain is cancelled out by people asking for refunds.

I find the dripped membership site – with the chance for someone to cancel a subscription if they want to – much better.

What are your thoughts on this subject?