Customer Compensation Plan

The Customer Compensation Plan is a post-sales solution in foreign trade. When sold products malfunction or are damaged, the seller (exporter) provides repair and compensation to the customer (importer or end user). Its core is to compensate the customer's losses caused by product issues through free repair, parts replacement, partial refund, or direct financial compensation, thereby maintaining customer relationships and brand reputation. It is commonly used in industries requiring after-sales service, such as machinery and electronics. Notes: The contract should specify compensation triggers (e.g., failure rate, number of repairs), compensation cap, liability attribution (whether human damage is included), claim time limit, and procedures. It should be distinguished from Warranty—the latter is a pre-committed free repair period, while the compensation plan focuses more on compensating for losses already incurred. Compared with Return & Refund, the compensation plan may include partial refund or repair instead, rather than a full return. A well-designed plan helps reduce trade disputes but requires precautions against customer abuse.