Money-back Guarantee Promotions: A Win-Win for Brands and Consumers

A money-back guarantee (or MBG) is essentially a pledge made by a brand to refund a consumer’s money if they are not satisfied with a product or service. This type of promotion is designed to reduce the perceived risk of purchasing a product or service, ultimately encouraging more sales and boosting consumer loyalty. It demonstrates confidence in the product and can be extremely motivating to drive trial, particularly where a consumer is loyal to a competitor brand as it removes the cost barrier.

An MBG is different to a Try Me Free as consumers can only claim their money back if they are dissatisfied with the product. Try-me-free promotions are perfect for new brands as they emphasize the opportunity for consumers to try a new product without any financial risk. Benefits of offering a money-back guarantee include increased trust and credibility with consumers, improved sales and consumer retention, and a competitive advantage over other brands. They can be a powerful tool for building a strong brand reputation and driving business growth.

Money-back guarantees are suitable for many types of brands, but they work especially well for those selling products or services that consumers may be hesitant to try due to uncertainty or risk. Here are some examples of brands that are well-suited for money-back guarantees:

Food and beverage: Many food and beverage brands have run money-back guarantee promotions to increase customer loyalty and brand awareness.
Household goods: Household goods such as cleaning products, laundry detergent, and personal care items are often sold with money-back guarantees.

Beauty and personal care: Beauty and personal care products are often expensive, and customers may be hesitant to try new products without a guarantee. Many brands in this sector have used money-back guarantees to attract new consumers.

Pet food and supplies: Pet owners are often loyal to their preferred brands, but promotions such as money-back guarantees can help attract new consumers.

Typically they follow these steps:

1. Consumer learns about the promotion: The consumer becomes aware of the promotion through various marketing channels either pre or in-store, such as social media, email marketing and tv before seeing the product in-store where the promotion communication is usually reinforced.
2. Consumer purchases the product: The consumer purchases the product from an authorised retailer and keeps the proof of purchase, such as a receipt or packaging.
3. Consumer tests the product: The consumer uses the product and decides whether it meets their expectations. If the customer is not satisfied with the product, they can proceed to the next step.
4. Consumer submits a refund request: The consumer submits a refund request to the brand, typically through an online form or by post. The request may require the customer to provide their contact information, proof of purchase, and a reason for the refund.
5. Brand verifies the request: The brand verifies the refund request by checking the proof of purchase to ensure it was purchased within the promotion period and meets other requirements, such as the product type or size.
6. Brand approves the refund: If the refund request is approved, the brand issues a refund to the consumer, typically through the same payment method used for the purchase.
7. Brand evaluates the promotion: After the promotion period ends, the brand evaluates the effectiveness of the promotion, including sales performance, customer feedback, and impact on brand reputation.

Here are some steps to follow to set up a money back guarantee promotion:

1. Define your promotion: Decide on the terms of your promotion, such as the duration, the products or services included, the consumer journey, how many claims allowed per person or household and any other restrictions. If you are using a fixed fee to cap the cost of redemptions, your provider will be able to advise on suitable terms.
2. Plan how to promote your offer: The key for a MBG is to drive sales rather than redemptions. Use various marketing channels to promote your promotion, such as social media, email marketing, and website banners but at-shelf communication will create stand-out of the campaign at the point of purchase to drive sales. This could be point-of-sale communication or on-pack. On-pack communication will help the stand-out on-shelf but also act as a reminder to consumers that they can claim their money back once they see the product at home. You’d see an increase in redemptions with an on-pack campaign because consumers are reminded of the promotion, but it is not essential that you communicate on-pack to meet the sales objective.
3. The fixed fee is agreed: If you are using a fixed fee company this is payable upfront before the promotion starts. The fixed fee provider will take on the risk of how many consumers will redeem, allowing the brand to not worry the promotion could out-perform available budget by too many consumers claiming their money back.
4. Implement the promotion: The fixed fee company will set up and manage the claim process. This might be part online via a claim form or could require consumers to post in proof of purchase or packaging. Consumers with valid claims will be paid regularly throughout the promotion term.
5. Monitor the promotion: Keep an eye on the promotion to see how it’s performing. Track sales, number of refunds, and consumer queries and feedback.
6. Analyze the results: Once the promotion is over, analyze the results to see if it was successful. Look at the sales performance, consumer feedback, and overall impact on your business. If the process required consumers to say why they were dissatisfied then this can be evaluated. IF the promotion were to run again, the fixed fee provider now has results to help gauge how your consumers react to this type of promotion to enable a more accurate fixed fee next time.

Mando have covered these promotions across the UK as well as; Germany, Italy, France, Spain and South Africa. We pride ourselves in extending your brand positioning right through the MBG journey ensuring excellence of delivery.

We can help with data capture, full verification as well as reward payments whilst covering all associated costs, providing you a risk-free promotion.