Would you like to increase the profits of every ad you write… without making any extra sales and without adding even one penny to the price of what you’re selling?
Then consider this:
A couple years ago one of my joint venture partners and I were selling a product that, while extremely high quality, was getting a ton of refunds.
One of the reasons for this was because we were letting people buy it on approval (i.e. we’d send them the product for 30 days before charging their credit card) and we were using PayPal. And the only way to do this with PayPal was to set up a “subscription” that lasted 30 days.
Only problem is, PayPal sends you an email reminding you at the end of those 30 days about your purchase and gives you a nice, convenient link you can use to cancel the order (you just click on a link).
Long story short, we ended up with a whopping 37% refund rate.
Ouch.
And it didn’t take long to realize we shouldn’t be using PayPal for this particular deal, and used a regular merchant account. As soon as we did that, the refund rate plummeted from 37% to 10%.
Now, here’s the thing:
We were making about $450 per sale. Which means we were grossing $45,000 every hundred sales. But at a 37% refund rate, we were only netting $28,350 of that money.
After changing the merchant account and cutting down the refund rate to 10%, we were netting $40,500 every 100 sales.
In other words, we added $12,150 to our profits…without adding a single sale or increasing the price. All we did was cut the number of refunds.
And ever since then, with every project I’ve worked on, one of the first things I try to strategize is how to write my copy and structure my offers in a way that minimizes refunds. Especially when doing “try-it-before-you-buy-it” offers — which tend to increase both sales and refunds.
Anyway, here’s the bottom line:
Depending on the price and quantity of what you’re selling, reducing your refund rates by just 5% or 10% can put a significant amount of money in your pocket without doing any extra work whatsoever.
