"The Four Components of Every Offer" (510 words)
Returns vs. No Returns. If the analysis suggests you could lose your shirt, require customers to return products in good condition to get a refund. This reduces cancellations, but it also can slightly reduce up-front response rates and customer loyalty.
Partial Refunds and Credit Certificates. These make sense if you have high-priced products, a high cost of goods and small profit margins. But with a low cost of goods and a low cancel rate, they can turn off your customers and increase their perceived risk.
Time Limit. Consider promising a full refund even after customers have used the product for a long time. This often can produce a lift in gross response without an increase in cancel rates.
How to Promote Your Guarantee. The best place to put this information is toward the end of the sale, such as the close of a direct mail letter, the bottom of a brochure, the end of a television ad or on any Web page that has a "buy" button displayed.
To be successful, it's not enough to just offer something for free ("Hey everyone, come and get it—FREE TRASH HERE!") Your incentive needs to be something of VALUE, perceived by your customer as worth $15 or more if bought in a store. It also needs to be an item or service that can be described in a clear, concise and compelling manner. And of course, it should be featured prominently in your promotion, positioned as a FREE gift (emphasizing the word "FREE!")
Terms of the Incentive
What does the customer have to do in order to get this incentive? If yours is a delayed-billing offer, you can promise to ship it on order ("…and it's yours to keep, even if you choose to cancel.") If it's an expensive premium or you have high cancel rates, you can promise to send it only after payment. Or, when marketing to previous buyers, it can be used effectively as an upsell incentive.