A Question of Money-back Guarantees and Marketing Your Online Products

Over the last 12 months, I’ve continued to shift some of my own online business activities to producing products to sell on my blogs (I wrote about some the process here).

This has been a profitable move for me, but has also been one that has meant making a fairly significant mind shift in the way that I operate. In fact, it’s probably more accurate to describe it as a series of smaller mind shifts.

I’m not alone—in talking to many bloggers who are making a similar transition, I’m seeing a number of questions come up again and again that indicate to me that we’re all having to jump over the same hurdles.

One of those hurdles is money-back guarantees.

I spoke with a blogger just yesterday about this—they shot me an email asking whether they should offer a guarantee on their ebook’s sales page. Their concern was that in offering a virtual product which could not be physically returned people would take advantage of the guarantee: they’d pay for the product, download it, and then ask for a refund to get what would end up being a free ebook.

I remember wondering the same thing when when I created my own sales pages for the first time. Is offering a money-back guarantee on a virtual product simply setting yourself up to be ripped off?

Answering the question of money-back guarantees

Lets start out by saying that you will certainly find that a very small percentage of people will probably take advantage of this refund to get a free product. I’ve been selling ebooks for a couple of years now and in the times I’ve been asked for refunds I’ve certainly suspected a handful of people doing this—but it’s a very very small minority.

Here’s what I’ve seen when it comes to refunds on my own ebooks. In the last two and a half years, I’ve sold around 40,000 ebooks here on ProBlogger and on Digital Photography School. I don’t have an exact figure on how many refunds have been requested and given (we refund 100% with no questions asked), but I would estimate that the number is less than 100—at the most it’d be 150.

The majority of those refunds have been requested for genuine reasons:

• from readers who thought they were buying a real book, not a downloadable file
• from readers who felt that the ebooks were too advanced or too easy for them
• from readers with download problems (e.g. those on dialup)
• from readers who accidentally brought two books.

You can tell that many of the requests are genuine from the way that the customers approach the refund; you can see for yourself that others are genuine (in that, for example, they didn’t attempt to download the product). Either way, refunded sales make up around a quarter of 1% of my total sales. They’re not very significant.

Also keep in mind that even if someone does request a refund with the intent of getting a free ebook, it doesn’t actually cost you anything more than a moment for you to process a refund. That’s a sale you’d never have had anyway, and if the person actually does read the ebook, they may just become a fan if what you’ve written is worthwhile.

On the flip-side I think offering a money-back guarantee comes with some pluses.

1. A money-back guarantee removes a barrier to purchase

I know for a fact that at least a proportion of my readers buy my ebooks because they know that if they don’t like them, they can get their money back. I regularly receive emails, see tweets, and get comments on posts from readers explicitly saying that they liked the idea of being able to taste and see before being committed to the purchase.

2. A money-back guarantee can help build trust

The web is a place where people are rightly suspicious. Having a money-back guarantee doesn’t automatically make people trust you, but it can help to build trust. Your guarantee is an indication to people that you’re not just after their money, but are interested in providing them with value.

Also, by issuing money back guarantees quickly and without any strings attached, you’re building a relationship with those who do seek them. Of the 100 or so refunds that I’ve given over the last couple of years, I often get emails back from people who are impressed with how easy it was, showing relief that I’m trustworthy, and at times indicating that they’re going to buy another product of mine that’s more appropriate to their needs.

I’ve also had quite angry and unsatisfied customers who emailed with dissatisfaction turned around when I offered to refund their money. I often communicate to readers who complain that I’d rather them be satisfied and happy with my company and not have their money, than have them unhappy and have their $20. I’ve also seen people publicly tweet or leave comments about how my sites are trustworthy because we issued refunds.

Refunds are an opportunity to build trust and goodwill with customers and readers.

3. Money-back guarantees differentiate you from the competition

Not everyone offers a guarantee (at least, not everyone promotes that they do). This provides an opportunity for you to differentiate yourself from the competition.

This was illustrated by an email that I received from a reader of dPS recently who told me that they’d bought our new ebook instead of a real, hard-cover book from Amazon because they saw our refund policy and didn’t feel that they’d be able to return a real book to Amazon.

If a person has the choice of two products (virtual or real) and one will give the buyer a refund if they’re not satisfied, it could just be that guarantee that gets that customer over the line.

4. Money-back guarantees drive you to produce value

One of the side-effects of offering a money-back guarantee is that it keeps you accountable to your readers and customers. I remember having this conversation with an author who was in the process of writing an ebook several months ago…

Author: I’m worried about offering a money back guarantee. Won’t that lead to lost sales?

Me: It could, but most people only ask for it if they’re genuinely unhappy with the product.

Author: I guess that means I better make it good!

While I’m sure the author would have done a good job one way or another, he expressed to me six months later, after the ebook was launched, that our short exchange had motivated him to put extra effort into developing his ebook. The threat of lost sales made him more accountable to his potential customers.

Why guarantees are worth it

Summing up, I offer money back guarantees of my info products because:

• they don’t cost me anything
• they do lead to higher sales
• they do help me build trust and relationships with readers
• I think it’s a good business and ethical way to be
• they keep me accountable to deliver value to those who buy them.

Ultimately, I want those I interact with online to get value and I’d rather not have their money if they don’t feel that value is delivered.

P.S. There’s another factor to consider: if you’re using PayPal, you’re pretty much forced into giving refunds at times. Buyers can issue a dispute with PayPal within 60 days of a purchase and, in most cases, a refund is granted. I spoke with one ebook seller recently (who’s a lot bigger than me) who said that they couldn’t remember a time when PayPal had sided with them in disputes, and refunds were almost always forced on them by PayPal.

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How to NOT Get Paid to Write Online (And Make Money Doing It)

Fresh out of college, I landed a job writing one-page sell sheets for a marketing company for $50 each. On a rare excellent day, I might do as many as two of these.

Soon after, I found a freelance gig that would pay me $300 per article I wrote for an inter-organizational newsletter. I got to interview people for that one. It was more work, but better money.

Eventually, I hooked up with a pretty big industry magazine and was being paid $1300 for 2000-word feature articles. That was the big money.

Magazine pay doesn’t go much higher until you get into the really big-name publications. I could often get two of those assignments at a time, but I needed to coordinate and interview around ten people for each article, so doing two in a month was a hell of a task.

Today, I’m doing much better in my writing career. Since I started blogging, I’ve written hundreds of posts, both for myself and for other blogs. I don’t have to interview people anymore, so it goes much faster and I can write much more. The combined total I’ve been paid for all of those posts (including what I’ve been paid for writing sales copy, promotional emails, and so on) is zero dollars. And really, it pays the bills better than my magazine writing ever did.

How to make “not getting paid” pay off

I just recorded a call with Copyblogger Associate Editor Jon Morrow entitled “How We Make $2000 per Guest Post,” and the funny thing about that call was that I’d had the idea to write the post you’re currently reading before Jon came up with the hook for the call. I guess great minds think alike.

See, newbie online entrepreneurs often want to “make money blogging,” and seasoned writers often come to the internet to expand their freelance businesses by doing online what they do offline: selling words for dollars. Both of those approaches assume a straight line between composing paragraphs and getting a check, but that straight line hasn’t reflected my experience in the blogosphere (and I’m in good company).

To put it succinctly, I don’t make money writing. I make money through a business, and that business does its marketing almost exclusively through writing.

Writing for me is a means to an end. It’s a way to gain exposure, gain popularity and authority, and build trust. Once you have enough exposure, trust, and authority with your audience, they’ll consider buying products and services from you if what you offer them is good. The cool part? It almost doesn’t matter which category or niche those products or services fall into.

It works like this:

Writing -> Readers -> Exposure, popularity, authority, and trust -> The ability to sell stuff.

Need a fancy term to make it legit? Call it content marketing.

Notice that I’ve used the very specific noun “stuff” to describe what you’re able to sell to a well-matched, receptive audience with enough of those preceding magic ingredients.

• Information products? Yep.
• Software and services of all kinds? Yep.
• Hats? Maybe.

Want to sell hats? Then write enough, in places where people who like hats congregate, to become a popular and trustworthy personality who happens to sell hats. Or makes hats. Or wears interesting hats. Or at least likes hats, and talks about hats a lot.

Your audience has to be willing to pay for hats, but if they are, they’re going to buy from someone. If your writing has put you in front of them, and made you popular and trustworthy, they’ll buy from you. It works for just about anything.

This is all about thinking outside of the nine dots. I came to the blogosphere as a humorist, but what I found was that people wouldn’t pay for humor. So what could I do with my funny writing? Why, sell consulting and website services, of course.

I remember asking my readers at the time, “Can I be the funny guy who writes about business, and also build websites somehow?”

Give what attracts, sell what people want to buy

And the answer was apparently that yes, I could write humorously about business — and tattoos, and unschooling, and The Matrix — and build a large readership who seemed to like and trust me. And at that point, I could offer websites. And consulting. And info products. And likely waffles. If those folks needed a site and/or were hungry, they’d work with me rather than finding their website guy or waffle house on Google.

When Jon and I did that call about making $2000 per guest post, what we meant was that guest posting is our primary (almost our exclusive) marketing strategy, and that on average, each post — each performance in front of a blog audience to build trust and exposure — resulted in around $2000 of income. That’s income that was created through writing, but wasn’t income we received for completing a writing assignment.

You want to be a writer? Well, don’t confine your thinking to the obvious example of putting words together for pay. There’s a whole world of ways out there to make money as a writer… and the interesting part is that most of them mean you’ll be writing for free.

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