Originally titled FTC Rule 429, the rescission was not intended to be a “Federal Satisfaction” guarantee or a “buyers remorse” insurance program. The rule had the limited purpose of correcting the specific problem of sales obtained through deceptive or high-pressure sales tactics. In surveys conducted on why customers terminate, the majority of customer responses included phrases such as: “The price is too high,” “We don’t see the value,” or “It wasn’t competitive with other prices we received.” Within many responses were statements such as “We didn’t believe the discount(s)” or “The seller was ‘high pressure’.” Then there were those who were uncomfortable with the need to buy right away.

Most of these responses do not meet the requirements or purpose of the law, however, the contract is usually terminated.

Buyers’ remorse is a natural psychological condition, however, the above statements confirm that a high rate of termination is due to a malfunction in the sales process. If you’re selling an expensive item (ie $20,000 to $30,000 or more) versus transactions of $5,000 or less, you’ll likely experience a high churn rate. If a customer perceives a price difference instead of a value difference, this often leads to termination. Issues such as the source and style of the lead, the prospect’s perceived needs, the size of the contract, and cash vs. finances will also affect the churn rate.

However, if your business is using outdated sales methods, using multiple “markdowns or discounts,” or if the value is not established before a price is quoted or an incentive is offered, your termination rate is likely to be higher. than it should be.

If your average contract is $4,000 or less, a termination rate of more than 2-3% is unacceptable. In contracts of $5,000 to $10,000, the termination can vary from 4 to 10%. Contracts of $15,000 to $25,000 vary, although it is not uncommon for termination rates to exceed 20%. High-need products such as roof replacement and HVAC systems experience much lower termination rates than sunrooms, greenhouses, and decks. Low-end, low-priced products and/or those purchased after many purchases have a much lower termination rate. Those who use termination as a means to close are unwise and may ultimately destroy your sales methodology.