Kickstarter Lesson #22: The Money-Back Guarantee and Trust

18 March 2013 | 25 Comments

RobWe did something fairly unorthodox with our Kickstarter campaign: We offered a money-back guarantee exclusively to Kickstarter backers.

The terms for our money back guarantee are as follows: If you pledge to support Viticulture on Kickstarter and you decide the game isn’t for you within one month of receiving it, you may return it to us for a full refund. Although we’ll be curious, we won’t ask for any explanation or reason for the return. The one-month limit is there simply because almost all games will eventually overstay their welcome; this gives backers a reason to play the game right away (hopefully multiple times before making a final judgment) and then making an informed choice about returning it if it’s not for them.

Why would we do this? Aren’t we afraid of hordes of backers returning used games to us, causing me to live on the streets in a cardboard house made out of Viticulture boxes?

Two reasons:

  1. Trust: Kickstarter is all about trust. As a backer, you’re entrusting your hard-earned money to someone you don’t know to create something you’ve never seen in person and deliver it to you as promised at some distant point in the future. It’s such a fragile thing, that trust. With a money-back guarantee, a creator is putting all the pressure on himself to deliver a fantastic product, and in doing so, he’s offering trust to backers. “Trust me to make this amazing,” a project creator says, “because if I don’t, you can simply return it.”
  2. Barriers to Entry: Whenever you think about buying something, you’re faced with some barriers to entry: Cost, time, effort, image. We’re always faced with reasons not to buy something (or pledge to receive a reward, in this case). As the creator/seller, the more barriers I can remove, the better. In this case, I’m removing the barrier of cost. A backer looked at Viticulture and thought, “I might like that, but it costs $49, and I might not even like it.” With a money-back guarantee, there is no “but.” You’ve removed the risk of losing money on something a backer might not like. Thus studies suggest that sales (pledges) increase significantly as a result of the guarantee.
  3. Kickstarter Exclusive: There is an endless debate raging about Kickstarter exclusives. Most backers I talk to love exclusives, but some prefer exclusives that are separate from gameplay (e.g., an alternative art box) while others prefer gameplay exclusives (e.g., a special set of cards). The money-back guarantee is separate from both of those categories–it’s something special you can give only to Kickstarter backers that they are sure to appreciate.

Although I’ve listed two reasons there, trust is by far and away the focal point. Project creators do all sorts of things to establish trust: They get third-party reviews of their product, they show photos of the product, they demonstrate their ability to make the product based on their background, they keep backers in the loop through consistent and transparent communication.

weigh-inAll of those are great ways to establish trust. But I must admit I’m surprised more creators haven’t offered a money-back guarantee. I think I know the reason, though, because I felt it back in August when I put it on Viticulture’s project page and I feel it now as I’m preparing to ship out 1300 games to backers: fear.

We’re afraid that people won’t like what we made. We’re afraid that people will take advantage of the offer. We’re afraid of losing money we don’t have due to returns.

All of those are valid fears. Like I said, I feel those fears. But I say, use those fears to drive you to do better and be better. Use that fear of rejection to make something beautiful, something that people cherish, something the brings people together to game. Use that fear of abuse to create true and genuine connections with backers. Use that financial fear to make find the proper contacts in your industry so your product can have a life after Kickstarter.

Use that fear not only to help your backers trust you, but also to help you trust yourself.

And let me be clear: Like most project creators who use Kickstarter to jumpstart a new project, I don’t have a well of money waiting to send refunds out to backers. Quite the opposite, really. But I believe that the number of backers who supported Viticulture partially due to the money-back guarantee (perhaps it was a tipping point) is far greater than the number of backers who will return the game.

We’ll see how it works out for Viticulture, and I’ll be sure to let you know. For now, let me know how you’ve seen project creators establish trust with backers. What’s effective or ineffective from your perspective?

Next: Setting and Achieving Goals

Also see: The Results of Viticulture’s Money-Back Guarantee

The Results of Euphoria’s Money-Back Guarantee

The results of Tuscany and the treasure chest’s money-back guarantee

Podcast with Game Salute about the money-back guarantee.

Leave a Comment

25 Comments on “Kickstarter Lesson #22: The Money-Back Guarantee and Trust

  1. My concern with offering a money-back guarantee is that its a legal agreement with (presumably) necessary terms and conditions. How did you set up the terms and conditions for your guarantees for your kickstarters? I’m not even totally comfortable with how I’d return money to a backer logistically. In the end backers back through kickstarter because they trust it, I have no direct access to their bank accounts so if they want to take advantage of the money back and they’re unwilling to give me their banking details to make a transfer (which is possible) I’d be afraid that I might be unable to give them their money back and that I’d end up breaching a legally binding offer through no fault of my own. I know that very few people took advantage of your offer but I always feel like a small percentage chance of a catastrophic problem is not worth a potentially relatively small advantage. What’s your take on that side of it?

    1. Glenn: Through Kickstarter, you can cancel and refund any pledge after the project ends. Kickstarter handles the transaction–it’s all built into their platform. It’s very easy to do.

      1. Sorry I missed this comment before. What happens if the backer has quit Kickstarter in the interim? I don’t want to be difficult here, I really would like to offer this service, but I’m concerned that it should have the back-up to be really meaningful.

  2. Okay, I’ll definitely keep that in mind. It means a lot coming from an experienced campaign creator such as yourself.

    By the way, I’ve read dozens of your lessons and I’ve found them very informative and easy on the eyes compared to others.

    I’ll keep in touch!

  3. hey Jamey,
    quick question on the money-back guarantee

    what do you think about offering it on a restaurant kickstarter?
    i’m sure the concept still applies but the product is obviously perishable and can’t be mailed back

    1. Martin: So if a person doesn’t like the taste of the product, they keep it and you refund the money? It’s slightly more of a risk because people could take advantage of it without losing anything, but if you deliver a tasty product, I think you’re completely fine doing it.

      1. Thanks for the quick response, Jamey!
        I also think the pros outweigh the increased risk.

        What do you think about different limitations on this refund such as

        1. limiting the refund to backers that pledged below 100% funding

        2. limiting the refund to be partial instead of a full refund
        (for example, if they pledge $100 and get 10 meals,
        on the first visit they can try 2 meals first, and still get a refund of $80 if they didn’t like it)

        3. limit the “first visit” to 2 meals (alluded to this in #2

        these might make it less risky but might also make the rewards section wordier than is necessary which is a separate issue to keep in mind

        any thoughts?

        1. Martin: I would keep it as simple and elegant as possible. This is about earning trust from complete strangers and removing barriers to entry. I would just say something like, “We guarantee you’ll enjoy our product. If you don’t, we’ll refund your pledge.”

  4. Hey neighbor! I’m going to write a full post about the money-back guarantee as soon as I know the results. The game has been out for between 1-6 weeks, depending on where the backers live, so it’s still within the 1-month grace period right now. As of now, no copies have been returned, but I don’t want to assume that none will be returned.

  5. Hello St. Louis! Im down here in Nashville…. Pretty much neighbors. :)

    I’m interested in your money back guarantee. What was the result? Would you do it again?

    Thanks for all your great insights into the Kickstarter process.

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