Create a truly meaningful guarantee

Does your guarantee provide value and eliminate risk for the prospect, or does it simply give their money back?

While giving their money back is often seen as an ideal guarantee, the fact is that while it’s the easiest effective guarantee you can make, it’s also the least common denominator.

Does your business reputation depend on least common denominator service? I suspect it doesn’t.

Least common denominator?

A least common denominator is like a best practice.

The term “best practice” implies something only the best companies employ, but the reality is that there’s so much focus on best practices that they’re often the average.

“Average” because these best practices are what most businesses do. The truly best practices of the best companies are often unseen to most other, or they’re simply not recognized as something that provides a substantial competitive edge.

These things don’t have to be expensive or mind-blowing. They simply require seeing your business relationship with the customer from their perspective. One example is being mindful of opportunity cost.

What about opportunity cost?

While a money-back guarantee does eliminate the client’s obvious loss-of-investment risk, it doesn’t take into account their opportunity cost – the cost to them of your inability to deliver.

Protecting the client from lost opportunity isn’t part of most guarantees, but it should be part of yours.

Let’s look at airline flight guarantees to understand why.

If you book a seat on a plane for travel to a critical face-to-face meeting and the plane is late for reasons other than severe weather, the airline may reroute you, book you on a competitor’s flight or worst case, get you a hotel room for the night so they can try to get you to your destination the next day.

What they won’t do is compensate you for missing the meeting, even your late or non-arrival is entirely their fault. How would they calculate what to pay you, assuming they could afford to?

If you miss a meeting due to air travel issues and this ultimately costs you $20 million, do you expect the airline to cough that up because you bought a $400 plane ticket? Only the narcissistic would have such expectations.

All the airlines can really offer is a full refund in the form of a future flight, a flight on their competitor, or to ask you to be patient while they work to eventually get you to your intended destination.

Even if the airlines sold “guaranteed travel” tickets at a much higher price, the logistics of delivering a guaranteed service would likely make it unprofitable for them.

Given the possible reasons that a flight can be late, it’s understandable, so why does the lack of an opportunity cost guarantee come off as weak in your business?

Create a truly meaningful guarantee

Most of you don’t have the logistical issues that airlines have, so you can offer a guarantee that deals with lost opportunity cost without a huge expense or effort. All it takes is some thought, action and follow up.

That’s why not protecting a client’s opportunity is weak.

If you own a local hotel, there will be times where you can’t fulfill a reservation. Plumbing leaks. Power fails. Stuff happens.

If you have an arrangement with nearby competitors, a bed and breakfast and a few airbnb hosts, you can avoid leaving a guest out in the cold. While it might not seem like a big deal to you, these things have a way of happening when the prospective guest is an influencer on Trip Advisor, or worse, a travel writer with two million Facebook likes and a cable TV show.

The same thought can go into guaranteeing carpet cleaning, car rentals or whatever you do. Take away the investment risk like everyone else, then wrap the opportunity loss in bubble wrap.

Go to the bullpen

When a pitcher throws so many pitches that they “lose their stuff”, managers call the bullpen for a pitcher with a fresh arm.

That’s what customers want. They don’t want excuses. They just want whatever you promised. Your job is to figure out how to deliver that even on your worst day, or when your pitcher has lost their stuff – whatever that means in your business.

To a client, an appointment or a reservation is a promise – and often that client has made promises based on the one you made them.

Do you offer a recession anxiety warranty?

Fed Up
Creative Commons License photo credit: Furryscaly

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  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.

High Anxiety

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. 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. 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. 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), so 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?

Recessionary buybacks

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.

Your turn

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?

3 guarantees that will grow your business

One of the places where you don’t see a lot of creativity in is guarantees. Yet they are one of the least expensive ways to market your products and service.

In a world where it sometimes seems that there are only two guarantees (that death and taxes thing), it’s a great way to stand way out in front of the dont-get-its in your market.

A guarantee serves one purpose to the client: it eliminates the risk that holds a buyer back just before they purchase. The expense of providing an incredible guarantee is extremely cost effective. Yeah, cheap.

Why? Because a small minority of people will use them – and more importantly, if you are really doing your job – they’ll rarely be used.

Your goal: To perform so consistently that your guarantee rarely gets used.

Not getting used is the real focus of a guarantee, but you may not be thinking of the reason why: it’s a great motivator to get your business to reach the levels of performance that you want to attain.

No good customer really wants to use your guarantee. It simply serves to protect them in case your service and products don’t match what you promised. 

So here are 3 guarantee ideas to use as seeds for your new guarantee:

Guarantee #1: For big ticket items (a fridge, furniture, and similar), guarantee that delivery will be on time, within a 1 hour window, or their delivery is free (assuming it isn’t already) plus you’ll buy the customer dinner for 2 at a nice local restaurant as an apology.

Result: Forces you to organize and streamline your delivery scheduling and execution. Tells the customer that they aren’t going to get that “sometime between 8 am and 5 pm on Tuesday” delivery promise.

How you turn it into more than a guarantee: Talk the local restaurant into co-oping the dinner expense. They want customers. They can get 2 dinner customers one time, split the cost of the dinner with you, and if they do things right – they have customers for life. You save a little money, the restaurant gets 2 new customers. Win-win.

Guarantee #2: The big audacious one year money back guarantee on something that no one else guarantees for a year. Yeah, I know. That little guy sitting on the left shoulder. He says they’ll never return it in a year, so what’s the point.

The point is that they can return it for a year, not that they will. It doesn’t matter that 98% of those asking for a refund will do so within 30 days. 

Result: More sales due to less risk. This guarantee is particularly effective on products and services that are normally guaranteed for 30 days but might see the bulk of their return for 60. If you raise yours to 60 days, your competitor would probably follow suit. If you raise it to a year, they’ll think you’re nuts and they’ll never realize what happened

Guarantee #3: Guarantee the intangible thing that no one else will: Peace of mind. “If you don’t feel that our product has made your family/life/business more comfortable, more pleasant, more successful and less hassle-filled, we want it back.” Your wording will probably need to be different than that, but that should  get the idea across.

Result: Forces you to remember what you are really selling. You aren’t selling a will or estate planning, you’re selling peace of mind, knowing your clients’ kids will be . You aren’t selling tax preparation services, you’re selling peace of mind, knowing that the IRS isn’t going to catch you goofing up your return because a real pro prepared it. Remember Michelin and the baby. They aren’t selling tires. They’re selling safety for that family and their baby. The sooner you remember that, the better off your business will be.

I’m curious to hear from you about this: What’s the best guarantee you’ve seen? Why did it motivate you to trust and buy from whoever offered it?