I was idly flipping through a science magazine over the winter holidays. In the back was a small advertisement that read something like,
“For $100 you can reserve a room on a space hotel in 2010. Guaranteed!”
The small ad guaranteed that you’d be relaxing in an orbiting space station hotel in 2010 or your money back. It was a serious ad and I wondered about the poor people who would have responded to it. When the hotel doesn’t get built, are they just thrilled to get their $100 back (because of the guarantee), without realizing that someone has had their money interest-free for the past 4 years?
And yet, the guarantee would likely sway many people to put their money into an oddball reservation like that. That one powerful word transformed the ad from being a comedy sketch to being a (semi) legitimate business endeavor.
Conversely, I was shopping around for a fairly large item online recently and the guarantee offered by the company said that they would gladly refund the product’s purchase price less shipping and handling. I didn’t buy the product because I didn’t want to foot a large S&H bill should it break down.
A home renovation store nearby was offering a low-price guarantee of 110%, meaning, if you found the same item elsewhere for a lower price, they’d give you 110% of the difference in price. Big deal, I thought: If I bought something for $500 at one store and saw it for $450 elsewhere, getting $55 back (instead of $50 like many businesses do now) wasn’t much more of a guarantee. At least they were trying.
E-book sellers through clickbank.com are required to offer a guarantee, but their guarantees (at least the ones I’ve seen) are fairly weak: you can return the book and get a full refund in 45 days if you jump through a series of impossible hoops to prove that the book was not valuable to you.
Businesses that offer a “full refund in store credit only” is a guarantee that infuriates a friend of mine so much he won’t shop at stores that offer that.
Do you have a guarantee? Nearly every business offers a guarantee of some kind. Unfortunately, few guarantees are really worth anything. Why? Because many business owners know that only a mere percentage of unsatisfied customers return the product. The guarantee provided may often be just enough to get some prospects to buy, but not enough of a guarantee to break the bank when a few customers return the product.
My advice? Offer a better guarantee. Offer a guarantee “with teeth” that really means business. Here’s why:
- You will get more customers because (like that advertisement in the magazine) people will feel that they can trust you because you have a powerful guarantee.
- Customers will be happier with your product. Surprisingly, a customer’s satisfaction level can rise simply because they know that if it breaks they can send it back easily.
- Customers will perceive a higher value for your product because you are valuing it so high with your guarantee.
- Customers will be willing to pay more for your product if they value the guarantee more highly.
What do I mean by a guarantee “with teeth”? Offer a lot more than the customer was expecting. This is a way that you can provide great value to your customers without spending a lot. For example, if you’re going to be the low-cost provider, mean what you say and offer a 150% discount (rather than 110% discount in the example above). Don’t offer store credit, offer a full cash refund. Don’t expect a dissatisfied customer to pay for shipping. These are simple and inexpensive choices to make when developing a guarantee, one that you mean!
And they will win you satisfied customers. I guarantee it!
