Guaranteed Service Refund: Why You Should Use It

Guaranteed Service Refund

What’s a Guaranteed Service Refund (and why you should never waive your rights to one)

You probably have insurance on your car. If you own a home, you have insurance on that, too. A guaranteed service refund (GSR) is like insurance for your package. If the package doesn’t arrive on time or not at all, a GSR guarantees you’ll get 100 percent or a portion of your shipping cost back. It’s like a money back guarantee for shipping. GSRs are the backbone of the parcel auditing industry, and you should never waive your rights to them.

How do Guaranteed Service Refunds Work?

When a carrier delivers a package later than the commitment time, the carrier will refund or credit your account IF (and this is a big if) your contract includes Guaranteed Service Refunds. If a package arrives more than 60 seconds after the guaranteed service deadline, it’s considered late. For example, let’s say your business is party favors. A customer orders 100 favors for a wedding and needs them in two weeks. The favors arrive in two and a half weeks—too late for the wedding—and the customer then needs to scramble around to find replacements. A GSR will refund the shipping cost to you for the favors that failed to arrive to your customer on time. On average, carriers are late with 3 percent of packages, so shippers can expect that amount back if they find and file all the applicable claims. Keep in mind there are certain reasons a package might be late, such as weather, that exempt it from a GSR.

How do you Request a Guaranteed Service Refund?

If your package fails to arrive by the promised date and your contract includes Guaranteed Service Refunds, you can make a claim by following certain steps. For example, if you use UPS, you can request a refund online by entering the tracking number of the package or by calling the customer service hotline. Refunds usually take one to two billing cycles to process. To manage your refunds most effectively you need to audit all your shipments, one by one. This process includes the following:

– Locating and organizing the tracking numbers for all your shipments
– Confirming whether each package arrived on time
– Identifying which late shipments qualify for a GSR
– Individually submitting each package for a refund
– Managing the exceptions resulting from your refund claims
– Checking the status of each claim

In order to maximize your GSRs, you must fulfill all these tasks within 15 days of the scheduled delivery date of each package. This may sound like a lot, but it’s worth it. On average, customers who have GSRs as part of their shipping contracts and file claims appropriately get a month of free shipping every one to two years. Over time, this adds up to significant savings. Unfortunately, many business owners don’t take advantage of GSRs, either because they aren’t part of their service contracts or because they simply don’t know they exist. In some cases, business owners sign away their rights to GSRs in exchange for other favorable terms or discounts in their contracts. However, these discounts are often significantly less than the GSRs they could receive.
GSRs Equal More Green In this day and age, with shipping speeds faster than ever before, there’s a trend for companies to waive their rights to GSRs. In many cases, it’s become a standard to waive the right to GSRs in the default contract. But this isn’t a smart way to ship. Our advice is this: Make sure you read your contract carefully, so you understand the terms. Never sign an agreement that forces you to waive your rights to a GSR. Negotiate the GSR back into your contract or consider switching to a carrier that includes GSRs standard in their service agreement. To get the most bang for your shipping buck, GSRs are almost always the way to go.

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