90 Minds Community

I know a bunch of us in 90 Minds are fans or even outright disciples of Verasage and the "Firm of the Future" concepts.

One of the elements of that is the Money-Back Guarantee. 

We offer it and yet I run into a ton of partners that think it's a disaster waiting to happen.

If you have concerns or comments or questions about how it works, comment here or on my LinkedIn post and I will do my best to address how works, what happens when someone asks for money back, our upsides and our downsides.

My opinion is that most businesses don't implement it because of fear of unknown. I am happy to address some of those unknowns if you want to ask.

I will start by saying that we have given money back to nine customers in seven years. As much as I wish we were perfect, we aren't. We screw up - either by taking on a bad fit customer or just not doing our jobs well enough to give them what we promised them. Sometimes it's the software. Sometimes it's the customer hearing what they wanted to hear during the sales portion and then being upset it isn't what they thought they were getting.

No matter what, I cut the check. 

I usually ask for a discussion so I can learn what happened and try to improve for next time. Sometimes customers don't want to have a call. I still cut the check.

Many of the customers who asked for money back go on to become our best customers and give us references. It sounds odd but once they realize they we have a sincere desire to help them and we are willing to fix problems to their satisfaction, for many a light goes off that says "these guys aren't full of shit and they are doing the best they can."

I wish I lived in a world where my team perfectly delivered on our promises and our customers had realistic expectations.

The money-back guarantee is the next best thing in my opinion. 

We are doing a lot of referral business - many of you but also many Microsoft Office and Azure partners. Most partners politely tell me this approach is out of their comfort zone. 

Ask questions if you want - I'm happy to share my experiences.

https://www.linkedin.com/pulse/how-avoid-getting-burned-your-crm-project-peter-wolf/?trackingId=Bz9Bb9vhTHmJZXNjIcjdkg%3D%3D

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Peter Wolf
Azamba Consulting Group
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I refunded once to a company that brought in a new controller whose idea of saving money was to ask for a refund.

I’ve sent money back to bad fit existing customers I think once.

Never on a new deal. I tend to be much more risk averse and avoid many marginal fit type sales ( Source: I follow and get calls from many former customers of VARS who sell first and ask questions later. Candidly it seems to be the same roving pool of VARS that this happens with)

Realistically I find most companies won’t ask. I’ve offered a refund verbally several times and almost always the response is that they don’t want one. In one case it was an issue where they began as a “small” customer and added a ton of integrations. I offered to refund or renegotiate and they significantly upped their annual fee.

Most VARS are already doing this so by publicizing it they really have little to no downside.

Fixed fee + money back guarantee.

When we lose to an hourly rate quote it’s generally something we wouldn’t want to take on anyhow.

In this environment the customer who wants hourly is generally saying “we don’t want to discuss our issue - just fix it”. I also find these companies likely to negotiate that hourly bill down.



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Wayne Schulz - Schulz Consulting - 860-516-8990
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My experience has been similar to Wayne's. 

I've been offering money-back guarantees for over 12 years and have only been asked for a refund once. It was definitely a bad fit customer. I was happy to give them a refund, shake hands, and part ways professionally. Knoxville being a small town, I still run into the owner from time to time.

In other situations where a customer has been disappointed or mistakes were made, I offer to extend their annual agreement for x number of months to make up for the mistake. I've found that customers react exactly the way Peter describes. They really appreciate our flexibility and dedication to getting the problem taken care of. 

I totally agree with Wayne that fixed fee/value pricing plus money-back guarantee is the way to go. Without the guarantee, it can't really be value pricing.

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John Shaver
Chief Value Officer
Axiology
Knoxville TN
(865) 389-3600
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Original Message:
Sent: 01-30-2020 08:12
From: Wayne Schulz
Subject: Money-Back Guarantees

I refunded once to a company that brought in a new controller whose idea of saving money was to ask for a refund.

I've sent money back to bad fit existing customers I think once.

Never on a new deal. I tend to be much more risk averse and avoid many marginal fit type sales ( Source: I follow and get calls from many former customers of VARS who sell first and ask questions later. Candidly it seems to be the same roving pool of VARS that this happens with)

Realistically I find most companies won't ask. I've offered a refund verbally several times and almost always the response is that they don't want one. In one case it was an issue where they began as a "small" customer and added a ton of integrations. I offered to refund or renegotiate and they significantly upped their annual fee.

Most VARS are already doing this so by publicizing it they really have little to no downside.

Fixed fee + money back guarantee.

When we lose to an hourly rate quote it's generally something we wouldn't want to take on anyhow.

In this environment the customer who wants hourly is generally saying "we don't want to discuss our issue - just fix it". I also find these companies likely to negotiate that hourly bill down.



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Wayne Schulz - Schulz Consulting - 860-516-8990
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We've used these guarantees for more than 5 yrs without a problem. If you want to get paid upfront, it's a necessary requirement. The more your defined project has very clear benchmarks, the easier it is to execute without problems. We haven't had a claim yet.

Psychologically, being paid upfront makes a significant change in the customer's thinking. It forces them to consider the price only once: when they buy. Normal pay-at-end deals mean they must think about the price a second time, in the end, with the subconscious thought of "wow, this is a lot of money -- did I do the right thing?" So you get arguments to reduce that bill. With fixed-price, paid-in-advance projects the only thing their brain focuses on is the checklist as to whether everything was done -- there is no explicit reminder of the price. Only if they are unhappy with the results will they start thinking, "Is this what I was buying?"

However, I didn't offer this to a couple of new customers on the first jobs who I'm unsure of their behavior. 

But for your existing customers, the money-back guarantee is simply part of your mutual relationship. In this subscription-based world, nearly all of their vendors are now paid for the period in advance; why shouldn't you, too?

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Jerry Norman
President, 90 Minds
Smartbridge Partners
512.419.1444 x112
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