Offering Money-Back Guarantees
I recently responded to a question from a fellow ASP (Association of Shareware Professionals) member asking about how I offer the 30-day unconditional money-back guarantee on my products. I figured that this is fairly useful information and want to share this with other shareware developers.
When people purchase my products the payment processing provider (I use SWREG) calls my key generator which issues the customer a 55-day time-limited registration key which unlocks all of the features in the product (Complete Time Tracking is fully functional in trial-mode as it is a long-term use product but my other products such as Mozzle Domain Name Pro are feature limited as they have significant short-term usage benefits and I, perhaps incorrectly, want to encourage people to purchase for full functionality). This registration key gets the customer using the full software immediately - customer happy.
If the customer requests a refund within 30 days I thank them for their interest in the product and welcome them to re-purchase at a later date should they change their mind (read: realise that they don't get it for free forever). If after 55 days they are still using the product I "take it back" so to speak when the temporary registration key expires.
Some time after 30 days I send the customer a permanent registration key. This key will not expire and I state that they should use it if they need to re-install the product in future. I typcially process 5-10 permanent keys at a time to save time and have a semi-automated system to make this only a few minute’s work.
Why 30 days for the guarantee? No customer has mentioned the money back guarantee (positively or negatively), other than when requesting a refund, however marketing experts insist that it does help with sales and that the longer the guarantee period the better it helps with sales and the less likely the person is to request a refund. I chose 30-days because it is fairly standard and means that it isn’t too long before I send out the permanent registration key (less likely that the customer changes their email address in that time).
Why a 55 day temporary registration key and not 30? If it were 30 then every day I'd need to be checking which permanent keys I'd need to send out so that there is no "down" time for the customer. 55 days makes the frequency flexible enough to allow me to concentrate on other product and business matters when required, though I try to keep the period as close to 30 days as possible. Having a longer period also allows for more relaxing vacation periods where I perform remote support by periodically checking and responding to email from Internet cafes if travelling.
A separate reason for issuing an expiring registration key, rather than a full permanent key when the product is purchased, is to protect against fraud and leaked registration keys. If the order looks suspicious (likely fraud, often purchased using stolen credit card details) then I have time to investigate further to find that the order is legitimate, is fraud and I refund the purchase (except in the case of "Verified by Visa" and "Mastercard Secure" purchases where the money can be kept) or unclear and I can optionally delay sending the permanent key to wait-out prompt charge backs.
How many people request a refund? I did a quick check of the last 8 months and refund requests for Complete Time Tracking are quite low at around 1 to 2%, and for Mozzle Domain Name Pro a bit higher at around 5% (mostly because of problems released with a couple of builds during this time).
Recently on the ASP newsgroups there was a short discussion of the design for my Complete Time Tracking web site. One person reported that the first thing that caught their eye when looking at the site was the guarantee logo (which is displayed on every page). That's good to know. I specifically wanted the guarantee to stand out, be clear, open, unambiguous and welcoming and would recommend not to add onerous (if any) conditions or hide details in fine print as in my opinion it negates the guarantee and can even be worse than having no guarantee at all.
The only negative thing that I have experienced with the dual temporary and permanent registration key technique is that a portion of customers, around 10% at a guess, either ignore or don’t receive the permanent registration key email (some causes are aggressive SPAM filters, or the customer changed email address or used an infrequently checked secondary email address for their order) . Eventually the customer asks where their permanent key is so I explain when it was sent and to which email address and then re-send it, often to receive a thank you reply. No customer has really complained about this.
In hindsight I would not change the way that I handle and process my orders, generate and send registration keys or the money-back guarantee. In my opinion this system works well.