Remember the outrageous 7/70 bumper-to-bumper warranty Chrysler introduced back in the early 1980s when they introduced K-cars?
At the time, Chrysler’s quality problems were front and center reasons to avoid buying their cars. Likewise, major car manufacturers limited long-term warranty coverage to the engine and powertrain (ie: transmission, axles and such).
Iacocca came up with the “outrageous” warranty to get people past the quality question so they would Â give Chrysler’s cars a chance. He knew the warranty was only good to get them INTO the cars – they’d have to meet their quality goals or that warranty would bankrupt them.
While the warranty was a big change for car owners, the main purpose was to provide a little anxiety release. To get you to realize that Chrysler’s quality had changed, so much so that they were willing to cover *everything*, and thus, you could trust them to buy their vehicles.
Obviously, it worked. The K-cars saved Chrysler (for the time being, at least) and they paid back the then-controversial billion dollar loan (guaranteed by Congress) in 3 years, rather than the required 10.
It should be noted that Iacocca says much of the reason to pay the loan off quickly was to get the Feds out of his business.Â No question there is lots of controversy about the 1979 bailout / loan guarantee and the terms that went with it, but that isn’t the topic of the day.
Fast forward to today – when you wouldn’t dream of buying a car without a very-long-term bumper-to-bumper warranty.
So what does your business do in an environment of high buyer anxiety?
Remove the anxiety
Hopefully the obvious answer is to remove it.
Back in the Granite Bear days, we found some buyer anxiety issues cropping up. The few people who would ask for a refund would do so right at the deadline date. In almost every case, we found that those were also the folks who hadn’t started using the software yet. They were worried they’d be stuck with it and having not tried it, the obvious thing to do was ask for a refund.
One of our solutions was to extend our 30 day money-back guarantee to 60 day and then to a whole year. As I’ve noted before, some people thought we were nuts and would give back tons of refunds on day 364, but that ignores the reason people bought business management software in the first place – to manage their business and save them time.Â Who in their right mind would invest a year into integrating software into their business (and vice versa) and then toss it out the door on a specific day? That’s nuts.
In our case, we knew that if they really *used* it for a year, they’d never ask for their money back.Â We were right and it made a huge difference in sales, despite seeming like an insane thing to do. Our upfront costs of sales and implementation were mostly buried by day 30 (and definitely by day 60), soÂ it made no difference whether we gave back the software on day 60 or day 364.
We also implemented other things that got them moving right away – another guarantee. Do you have specific guarantees for different parts of your business?
Recently, you’ve seen a number of major car companies offer to buy your car back if you lose your job – and that’s after they make several months of payments for you.
Hyundai started it and several other manufacturers felt the pressure to follow suit.
As I hear it, one very dark economic area’s local Hyundai dealer had their best weekend *ever* after corporate started offering these deals.
Something else that tells you about people in a recession: They aren’t all broke. If the buyback changed car buying behavior of a large group of people – did it also put a bunch of money in their pocket?
Of course not. Clearly they had the ability (and desire) to buy, but their anxiety about the future kept them from buying.
In my case, I guarantee my marketing / strategic planning work.
Some people suggest that I’m nuts to do that. I might be nuts, but that has little to do with the fact that I’ve never been asked for a refund.
Meanwhile, it’s a huge differentiating factor because almost no other consultant guarantees their work. They either don’t have the confidence in their work, or the gumption to hang that guarantee out there – likely for fear that someone will use it. Maybe that even tells you something about the work product they provide from a strategic perspective.
Someday, someone might ask for a refund. Even if they do, it’s a great anxiety reliever for every other client – regardless of the economy.
What are you doing to take your clients’ anxiety off the table (or reduce it substantially) and get them from thinking to taking action/buying?