Earlier today I had an interesting conversation with a new coaching client.
We were discussing the refund rate on his DVD course (which is only 2%) and he thought I had lost my mind when I told him that 2% was TOO LOW…
I explained to him that I typically view too low of a refund/return rate (under 5%) as a sign that you are not making a strong enough effort in your copy and follow-up sequences to sell the product.
In most cases if you have a refund rate of 5% or less, you are probably leaving a ton of money on the table.
If you are selling $5,000 per month of your product and have a 2% refund rate, is it a bad thing if you boost your conversion rates to the point that your refund rate jumps to 7%, yet you are now selling $25,000 per month?
Of course you can take it too far…
In most cases I view a 10% refund rate or higher as a warning sign of low product quality. (Or at least that your product is not delivering on the promises you make in your copy.)
So from my experience and testing, the refund rate “sweet spot” seems to be found between 5% to 10%. Less than 5% and you are leaving money on the table, more than 10% and your product needs to deliver more value.
Now these numbers are not set in stone…
For certain products, services or niches a refund rate under 5% is not necessarily bad (particularly on “service” based offerings where you significantly over-deliver on your promises) and I am sure there are niches where over 10% may not necessarily be a sign that your product sucks.
I’d like to hear your thoughts on this…
What is your refund/return rate? (You are measuring and tracking it… Right?)
Do you agree or disagree with my 5% to 10% sweet spot rule of thumb?
Are there niches or situations that a refund rate over 10% is not a bad thing?
How about niches or situations where you are NOT leaving money on the table when it’s under 5%?
About the AuthorEric Graham is a serial entrepreneur, author, speaker, copywriter and consultant. Enter your name and email address below to get notified when new response boosting tips, tested conversion strategies, updates, articles and videos are posted.
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