Why Refusing Money is Smart Business

by Mike Sententia on April 11, 2011

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No form of healing — surgery, reiki, deeper-than-energy healing, etc — works 100% of the time.

But you should refuse a customer’s money if they’re not amazed with the results.

Here’s why.

1. Price = Value x Confidence

Say a successful healing session is worth $100 (to pick an easy number). Should a customer pay $100?

No. They should pay $100 times what they believe is your probability of success, factoring in questions like:

  • Does this type of energy healing work?
  • Is this guy any more legit than the Nigerians with v1agar@?
  • Are those testimonials from real customers? Edited real customers? Imaginary customers?

Factor in all those questions and you might get 25% confidence. So they’ll pay $25 up front for a healing session.

See what happened? You know you’re for real, and you know your healing technique gives good results 90% of the time (for example), so you know it’s worth $90. But they know less, so they’ll pay less.

Customers will always have more unknowns than you, so their confidence will always be low relative to yours. To charge a high rate, you need to remove “probability of success” from the equation. The only way I see to do that is to only charge when you succeed.

2. It’s Remarkable

Remarkable, in the proper sense, meaning worth remarking on. (That’s what a referral is, of course: When someone remarks on their good experience with you).

Chris Guillbeau has a great post on satisfaction guarantees, which I’ll summarize as:

Everyone gives a 30-day money-back guarantee, and everyone knows it’s more work to get your money back than to beg for that money on NYC subways. So no one cares.

He’s right. You have to make your satisfaction guarantee not suck. Most businesses try to minimize refunds. You should aim to maximize refunds for unhappy customers.

Here’s my remarkable satisfaction guarantee:

You only pay if you’re amazed at the results. Not satisfied, not “I think I feel a little better,” but amazed.

I’m also borrowing from Joel on Software and offering a 90-day no-questions-asked money back guarantee. Here’s how it works: Get a healing session, call me 2 months later and tell me you need the cash to buy a comic book. You’ll get your money back. Heck, you can call me on the 91st day, 105th day, 203rd day and you’ll probably still get your money back.

No one else offers that. They’re worried about losing money. I’m not.

Why? 3 reasons:

  1. I know my healing work is good. Customers don’t. So I should bear the risk of the healing technique not working long-term.
  2. I want customers to know it’s safe to try, see how it works, and recommend to friends. I’m confident they’ll want another healing session more than they’ll want a refund.
  3. If you pay with a credit card, you can call your bank and contest the charge. As a small business, I will lose, plus be charged a “chargeback fee.” Which means I not only pissed off a customer, I also lost money doing it.

My goal is to be so committed to making sure you only pay if you’re amazed that it’s worth remarking on.

3. It Makes Referrals Safe

Energy healing is fundamentally a referral business. I can shout that I’m good from the top of every church and the only people who will care are the police arresting a nutter. But if your friend says I fixed their problem, you’re going to check me out.

Referrals only work if the referrer (the guy I worked with) knows he won’t look foolish.

Say Bob recommends me to Sally. I make Sally feel $50 worth of better, not $100 worth. Now I have 2 options:

  1. I can charge Sally $100, and she’ll tell Bob that I suck, and poof, no more referrals from Bob.
  2. Or I can refuse Sally’s money, she’ll tell Bob that I helped her, didn’t charge her, and that she’s basically happy. And Bob will refer me more, and maybe Sally will try me again later.

I’ll take option 2 any day.

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