Money Back Guarantees – Pros and Cons

Recently, General Motors made a splash by announcing the company plans to offer 60-day money back guarantees on their GM vehicles. While the money back guarantee has been a marketing tool for thousands of years, it hasn’t often been seen in the auto industry.

While money back guarantees can provide many positives, there are also some negatives that should be considered. Before creating a marketing campaign that revolves around a money back guarantee, consider these pros and cons:

PRO – Increased Confidence
When customers see that a company is willing to put their money where their mouth is, that really helps to improve the confidence in the product or service.

CON – Free Rental
Where there is a money back guarantee, there will be people taking advantage of the offer. You must realize that there will be people who make a purchase with the intent of eventually getting their money back.

PRO – World of Mouth
A money back guarantee generates a lot of free word of mouth advertising. The “what is there to lose?” attitude can draw customers by the dozens.

CON – Paperwork Headache
No matter how simple a money back guarantee may appear to be on paper, it is never easy for the business. Using the GM example, they will have to inspect the return cars, make sure that the customer followed the guidelines and then will have remove the sale from the records before placing the car for sale once again.

Guaranteed (Image: Flickr)