Your Refund Policy is Wrong
“If you don’t have any refunds, you are not getting new registrations,” he noted. By refund, Franklin is talking about refunds for dissatisfaction. Every program offers refunds when a class is canceled or a registration is canceled before the class starts. Franklin was at the top of his game in New Orleans with his hard-hitting factual how-to advice.
A lifelong learning program can financially sustain refunds for dissatisfaction of up to 4 percent of your income, but no program has reported coming close to that figure. Most programs with a money-back guarantee are reporting giving back only around 1 percent of income.
By contrast, Franklin says the money-back guarantee can generate another 10% in income from new customers who might be wary to take a class without the guarantee. So a full money-back guarantee does not cost your program money. A full money-back guarantee makes your program money.
Take Away Risk
What the money-back guarantee does psychologically is take away the risk in a new customer’s mind, according to Franklin. A big part of increasing registrations is lowering barriers to registration. The fear of being dissatisfied is a huge barrier. The full money-back guarantee reduces that barrier significantly.
Successful Programs Do
The money-back guarantee is one reason why successful programs do so well. Some 32 percent of successful lifelong learning programs have a full money-back guarantee. By contrast, less than 1 percent of less successful programs have a full money-back guarantee. LERN’s UGotClass program can testify to the value of a full money-back guarantee. We offer a full money-back guarantee to any UGotClass customer, even after the course is over. We once had a student complete the course, show what he produced, and then write a testimonial for the course before asking for a refund. We gave him a full refund. Our refund rate is only 0.005, or less than half of one percent, after 15,000 registrations and five years of the policy. UGotClass is growing at about 25 percent year on average, so the full money-back guarantee policy is a winner.
Photo: Paul Franklin presents to a packed room at the big LERN annual conference last month.