We tend to look at guarantees with a fair degree of scepticism these days, often not being sure they are worth anything and are probably just salesman’s spin. In some cases this can be true – double glazing springs to mind as a 10 year, or even a lifetime, guarantee you may take with a pinch of salt as experience shows that not all double glazing companies last as long as their windows and so the guarantee may not be worth the paper it is written on.
But are we in danger of throwing the baby out with the bath water and can some guarantees be valuable?
John Lewis for example offer a two year guarantee on all electrical goods as standard while most other retailers only offer a year. Given that John Lewis is competitive on price are you more likely to go for a (free) two year warranty or a one year one when making your decision to buy? Everything else being equal, it is a bit of a ‘no-brainer’. So some guarantees can work and, particularly if you are able to offer a better one than your competitors, will work to your advantage if you use them.
Why is this? Primarily it is because you are reducing, or even getting rid of, your customer’s risk and the less risky their buying decision is the more likely they are to buy.
Take Domino Pizza as an example. They worked out that it was not necessarily the quality or otherwise of the pizza that was the most important thing to hungry customers, it was the speed of delivery that mattered. So, to take away the risk of having to wait ages for your pizza order to arrive whilst you slowly starved, they used to guarantee to have your order to you within 30 minutes or you wouldn’t have to pay. The story goes that Dominos would also sometimes be deliberately a few minutes late and not charge just so that you told your friends that the guarantee worked!
So what is important to your customers, is it speed of delivery, quality of the product, the value they will get from buying from you or something else?
For any of these, if you can take the customer’s fears and the risk of buying from you then it is hard for them to say ‘no’.
Offering guarantees can be scary but, in many cases, they mimic what we would do anyway. If a customer comes back to us and complains that the product is broken or that the service was not up to scratch we would do something about it, firstly because we want them to come back and buy again and secondly because we don’t want them spreading negative comments about our business around (so much easier these days on social media). So, if we would do something to rectify a mistake anyway, why not guarantee it up front – we haven’t lost anything and we have probably generated more sales by offering it!
The only thing it is not great to guarantee is price!
If you guarantee to beat any price of your competitors you are on a downward spiral of price cutting which is never a great idea. It can work for the big boys with the buying power to offer low prices, but it is never a great place to be for a small business. If your customers are very price sensitive then giving guarantees on other aspects of what you do for them sets you apart from the competition and enables you to justify not being the cheapest of the cheap because you are offering more (and, to be blunt, if this still doesn’t wash with them, are they really the kind of customers you are looking to have going forward?)
So look closely at what is important to your customers when they are thinking about buying from you and look to reduce or extinguish that buying risk by offering strong guarantees that set you apart.
Do we put our money where our mouth is? Well, yes – the McKellens Masterclass guarantees that, if your business doesn’t generate at least five times the value of your investment in the programme then we’ll give you your money back. Beats a double glazing guarantee any day!!