Podcast episode (MBA2630) hosted by Omar Zenhom answering a listener (Rita) about whether a 30-day, no-questions-asked refund policy is too generous. Omar explains refunds can increase conversions by lowering perceived risk but, if too open-ended, attract abusers and reduce customer engagement. He cites industry refund-rate ranges (commonly 8–12%), says a refund rate above 5% indicates product problems, and recommends a 14–30 day refund window (30 days max) while encouraging experimentation (e.g., 45 days may convert more but could raise refunds). Concrete examples: Webinar Ninja used a 14-day trial; The 100 Dollar MBA offers a 30-day no-questions refund. He also advises a clear refund request process and a short cancellation-survey to collect feedback. The transcript includes multiple ad reads (USAA, Dell Tech Day, Strayer University) and a Cosentyx endorsement by Michelle Bernstein.
Questions this episode answers
Typically between 8% and 12%.
Higher than 5%.
Generally 14 to 30 days (30 days max).
A 14-day free trial.
A 30-day, no-questions-asked money-back guarantee.
Chapters
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Rita asks is your refund policy too generous? This is a great question because your refund policy isn't just a footnote on your website, it's a trust builder. It can also be a conversion killer. So how generous is too generous? In Rita's case, she has a 30 day, no questions asked money back guarantee for her online program. So let's break down and find the sweet spot that protects your business and makes her customers feel safe. And hey, if you have a question you want me to tackle in a future Q and A Wednesday, head on over to 100nba.netq and ask away. And apologies for my voice, it's a little bit hoarse today. I don't know why, but the show must go on. So let's get into it. Welcome Back to the $100 MBA Show. I'm your host, Omar Zenholm, where I deliver practical business lessons three times a week, Monday, Wednesday, and Friday to help you start, grow and scale your business. So let's break it down. I found that refund policies actually matter more than you think. A generous refund policy can actually increase conversions. Why? Because people are afraid of risk. They're afraid of wasting their money. They're afraid of making a mistake. A clear, confident refund policy says we stand by what we sell. If it's not for you, that's okay. You can have your money back. It lowers resistance. It creates trust and creates confidence that this person actually is standing behind their products. But here's the catch. If your refund policy is too open ended, too vague, or too long, two things can happen. Now, I'm speaking in generalities here, but this is what I found that number one, you attract refund abusers, people that treat your product like a rental. And number two, you train your audience not to take action. They feel like there's no consequence to requesting a refund. They don't take your offer seriously. And most of all, they don't actually take action on your product or service. They don't actually use and consume your product and service and get a win and feel satisfied. Here's what the data says. Industry statistics show that refund rates for online courses can really vary widely. Standard refund rates based on the data was pretty shocking. The standard refund rate is typically between 8 and 12%. I have never had refund rates that high. That's like 10% of people asking for a refund. That sounds really high in my experience, but maybe it's just the way I've packaged my products. But that's what the data says. That's what research has shown us with online courses. Number two, Higher refund rates in some cases happen, especially when a course doesn't meet expectations. So when you have people that are spending a lot of time and energy and effort on marketing, more time and effort than the actual product itself, then often they over promise and under deliver and that increases the refund rate dramatically. And it could be as high as 30% in my opinion. In my very humble opinion, your refund rate should not be higher than 5%. If it's higher than 5%, that means there's something wrong with your product. Your product is not meeting the needs of your audience. Okay, either you got to change your audience or change your product because that's pretty high. That means for every 100 customers, five people refunding, you don't want that. You want it as low as possible.
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Now the data I just shared with you these figures. They suggest that a generous refund policy can build trust. It's essential to ensure that your course content meets or exceeds your customer's expectation to minimize these refund requests. So I always try to advise my students when they're building products or Services, you need to really be unreasonable. I know that sounds crazy, but be unreasonable with how you meet expectations or exceed expectations. Like they're just like, wow, this person is going way above and beyond. This is a lot more than I was expecting. And therefore this helps you reduce your refund requests dramatically. Here's my philosophy on refunds. Be generous, but with some boundaries. Just so that there are some rules, here's a great rule of thumb. Give them enough time to evaluate your product, but not enough to forget that they bought it. Okay? So give them enough time for them to actually get started, consume, get a win. That usually means a 14 to 30 day refund policy. 30 days max, I would say obviously depends on your product or service, but that was enough time for my products to be consumed by my customers. So for example, in my software company, Webinar Ninja, we had a 14 day trial where they didn't pay anything to use the product, run a first webinar. That's enough time for them to build something of value, use it, and feel like, okay, this is the right product for me. They don't need more time than that to evaluate if this webinar software is good enough for them. With my online course, a hundred dollar MBA, we have a 30 day, no questions asked money back guarantee. We're a little bit generous there. You don't need 30 days to evaluate if this course is for you. But we're a little bit more generous because we know people get busy and sometimes they buy and then they don't have time to really get into the course until maybe a weekend or two later. And we just kind of err on the side of being generous. You also wanna have a clearly defined refund request process. So if they have to ask to cancel or ask to get a refund, how do they do that? Well, make it very clear. Do they email support? What's that email address? Make sure that's clear on your website. Make sure that's clear maybe inside of their membership area. Make it super simple for them to understand that hey, this is a low risk situation. And even I do this in the sales webinar. Like when I talk about why they should buy, I said, hey, if this is not for you, you can just go into your account. This is what you do. Hit cancel and we'll get an email from support and you can get a refund within 30 days. If that cancellation happens within 30 days. Also add a tell us why question to collect feedback. I always encourage everybody to have a cancellation process in place in their business. With their products or services. So when they're asking to cancel, when they're asking for a refund, there should be some sort of survey they need to take to give you feedback. We have this automated inside of our membership area. So when they cancel their membership, they're asked a few questions. And these questions allow us to improve, allow us to create a better product or service. And it's pretty painless. If it's just three or four or five questions and people understand that that's typical and that's okay, as long as it's not like a 20 question survey, I think that it's pretty painless. This keeps your policy honest and fair for everyone. And trust me, serious customers respect clear boundaries. So let me wrap this up for you. 30 days for an online course is a pretty decent and generous, in my opinion, ref policy. It allows people enough time to get into the program to learn, to watch a few videos, to consume, to implement what they learned and to get a win. If it's not. For them, 30 days is plenty of time for them to realize that it's also generous enough for people to feel like, Okay, I have 30 days to make a decision when I buy. It's not like I have five days or seven days. It's kind of tight and they may not have time for that. But I also want to say, you may want to experiment. We experimented with refund policies constantly in our businesses in the last 10 years. For your business, you might find that a 45 day refund policy might convert better, might get more customers than a 30 day money back guarantee. Also track how many refunds you get from that cohort when you made that change. So maybe you want to balance conversions with refunds. So like, hey, if 45 days got me more conversions but got me a whole lot more refunds, then maybe I shouldn't do that. But experimentation is really what you need to do when it comes to any kind of decision like this. And this is kind of low risk. It's not really going to make or break your business, but it's worth experimenting because it can mean more money for your bottom line. Here's the truth before I go, I want to leave you with this. Most people won't ask for a refund just because they can. Most people are decent. Okay. But when you know there is a refund policy in place, there's more of a likelihood that you're going to say yes in the first place. The customer will say yes in the first place if they feel like, hey, there is a risk reversal. There's a way for me to reverse this decision if it's not for me. So to be fair, to be clear, make sure your refund policy isn't just a policy. It's a reflection of your confidence and how you treat your customers. Thanks for tuning in to the $100 MBA show. If you want more practical ways to grow your business without guesswork, then you should subscribe to my three Things newsletter. Every week I send you three things one Something to think about, something to grow your mindset Number two Something to do so you're stacking wins week after week and number three Something to learn so every single week you're scaling up. It's absolutely free and all you got to do is go to 100- MBA-NET and sign up for any of our guides and you get added to our newsletter automatically. It's my way to coach you from afar and help you along your journey. Until next time, keep on going. You got this.
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