Money Back Policy: Need Of The Hour?

How often has it happened that you have bought something, used it and then
realized you do not like some features? And how often is it that you were able to return
the product to the vendor directly and get a refund of the amount you paid for it in the
first place? My personal experience says ‘Never’.

But this is precisely the service model that Wipro ePeripherals (WeP) has
had in place for the past five years for some of its product lines. Customers can buy a
product, use it and if they are dissatisfied with it, they can simply return it within 30
days and get their purchase price back. In some cases, customers have returned the product
simply because they did not like its color. And they still got the refund!

Incidentally, some online portals like US-based Directron offer a 30 day
money back offer on certain IT purchases with 15 percent restocking fee for non-defective
returns. No credit or refund is however offered after 30 days. As against this, WeP offers
a ‘no questions asked’ money back policy.

Talking about this initiative, albeit reluctantly, Jayant Gundewar, Chief
Strategy Officer, WeP said, "We have offered this policy across most of our products.
For us, it has never been a marketing tool. It is simply a customer protection tool which
was conceptualized by our CEO, Ram Agarwal and which he believed would bind customers
closer to our company."

Incidentally, when Agarwal floated this idea five years ago, his entire
operations team was unconvinced about it and they felt that they would have a pile up of
rejected products. But they were pleasantly surprised when the percentage of returns was
less than single digit.

Exclusive offer by WeP

It is very surprising that no other vendor offers this kind of service in India. Kakuni
Mahto, Imaging and Printing Group—PR Manager, HP India mentioned that HP did not
offer such a money back policy. But she added that the company does have a part
replacement policy for some of its product SKUs. According to HP’s website, the
company warrants replacement parts provided to maintain hardware products against defects
in materials and workmanship for 90 days after return of the product to customer. While
several other vendors offer this replacement policy, there is no mention of a money back
option.

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"For us, the money back policy has never been a marketing tool. It is simply a customer protection tool that our CEO, Ram Agarwal believed would bind customers closer to our company" Jayant Gundewar, Chief Strategy Officer, WeP

This is also the case with IBM and Lenovo products. In fact one of
IBM’s company officials mentioned that IT brands aside, there are very few FMCG
brands too, which offer such a money back policy up to 30 days. Which makes WeP’s
offer all the more remarkable. And makes one wonder why the other vendors are not
emulating this policy.

Part of this could be because most vendors do not have enough faith in
their customers. Like one vendor representative mentioned, "If we were to offer a
money back policy for even our lower-end products, there is a good chance the customers
will use the product and at the end of the policy period, simply return it and pocket the
money. That returned product will be a total write-off for us, since we can’t resell
it in the market."

However like Gundewar pointed out the percentage of returns that WeP gets
under this policy is less than one percent, which speaks a lot about the customer
maturity. He further explained, "Most customers buy a product because they aspire to
own it. If my product is good, then there is no reason for them to return it. This faith I
have in my products is reflected in the money back offer I extend to my customers."

Nityanand Shetty of EssenVision and a solution provider from Mumbai agreed
with this contention. He noted that while selling a solution to his client, initially he
would like the client to have a comfort level about the brands he is offering. If the
client has the choice to return the product after using it, then it shows the level of
commitment that the vendor is willing to make in his product. Being unaware of this WeP
policy he felt it was a fantastic policy, which other IT companies should replicate.

While Gundewar has great belief in end-customers and not misusing this
money back policy, he admits that WeP did put in place a process to ensure that the
channel does not use this to reclaim the money. Therefore, a form with the details of the
policy that needs to be filled in by the end-customers is placed within the box. Unless
the manufacturer seals broken and box is opened, the policy can’t be used.

Why the policy is needed

It is definitely the time that a money back policy is offered in the Indian IT space,
especially for the faster moving, lower-end products. It will not be possible to emulate
it for solutions, where a lot of detailing and customization takes place.

A simple analogy here is the trend in European and American countries
where a consumer can buy a burger or Coke, have it and then return it. And in most cases,
they are given another one in return especially if the reason for return is a valid one.

Similarly, if a customer wishes to return a product after using it and not
finding it up to his expectations then he should be permitted to. Of course, if the said
customer runs over the product with his car and damages it then obviously such a policy
can’t be invoked and instead the customer has to settle for a repair warranty.

This is where vendors have to walk their talk about having the faith in
their customers. While most feel that customers would simply turn in the product after
having sampled it, they fail to realize that this touch and feel concept is the very thing
they are trying to promote through new age malls and experience zones. If they can extend
this customer experience privilege to the latter’s home or office and if that
experience is good and the product addresses his need, why would he want to trade in the
product?

Another aspect that WeP has hit on with this policy is that it helps them
gauge genuine and ground level customer feedback about the product. This in turn helps
them decide whether they need to make any modifications to the product or even pull it off
the market. This is especially handy during the initial phases of a product launch.

So can we expect some more vendors adopting this strategy in the near
future?

VINITA BHATIA