In 1993, Christopher Hart wrote a great book called Extraordinary Guarantees. In the book he outlines the extraordinary power that guarantees have to help you build market share.
In the book he details the results of his research into guarantees and their power to also create quite extraordinary organizations. We’ve been using what we think are pretty powerful guarantees for decades so we can attest to their power.
The purpose here is to have you understand the critical elements so that you can apply the skills to your businesses.
Consider this fundamental point.
Whenever a customer makes a purchase, they take a risk that the product or service will work.
When you think about it logically, the fact that they’re taking a risk must hamper the decision-making process. In a lot of cases, it must put off the decision. The product or service never gets bought by that customer.
So fundamentally then, we’re suggesting that when a business removes the risk from the customer (that is, when it’s clear there is absolutely no risk to the customer in investing in the product or service), the business will gain more customers.
That is a simple proposition, isn’t it?
But simple as it actually is, it raises all sorts of questions. Questions like:
• How do you articulate the guarantee?
• How do you develop systems to cope with it?
• Won’t clients or customers take advantage of the guarantee?
• Exactly what should you guarantee?
Here we’ll answer those questions and many more. That’s because we firmly believe there’s a huge marketing opportunity (and more) to be had by using guarantees correctly.
Most guarantees you see in the marketplace have little power. They have what one person called “weasel wording.” They don’t work. They do nothing.
How you articulate guarantees can have an enormous effect on their power. Consider this as an example — a standard guarantee might be to offer customers their money back if they return the product within 30 days. A stronger guarantee would be to let them try your product for free, billing them only after 30 days has expired.
Now before you raise your hands up in the air and say, “We couldn’t do that!”, let me mention that you may not be able to do that. That’s not the point of our discussion here. The point of the discussion is to give you information in a particular way and then have you apply it in a way in which YOU feel comfortable in your business.
Will customers take advantage of you when you offer a strong guarantee? A few will, but the money you lose on those customers is a tiny fraction of the increased sales you’ll experience by offering the guarantee in the first place.
You can go even further than simply “removing the risk” by having what’s called a “better-than-risk-free” guarantee.
This is one of the most powerful forms of guarantees lifting market share. Here’s how it works: In addition to the usual money-back guarantee, the customer is offered free bonuses, which they’ll receive along with the product. Ideally, these bonuses cost very little, but have high perceived value (for example, special reports).
The “better-than-risk-free” offer is this: The customer gets to keep the bonuses even if they return the product.
Such a guarantee could be phrased like this: “These bonuses are worth more than $150, so even if you decide to get your money back, you’ll be $150 ahead just for trying my product.”
Stated that way, it’s almost irresistible, isn’t it?
Of course, “everyone” has guarantees. The problem is that no one tells you about them in the right way. For example, what does “unconditionally guaranteed” really mean? It’s missing some major elements in constructing powerful guarantees.
There are three major elements in constructing a guarantee, PLUS a fourth element, which relates to the mindset. Let’s talk about this “mindset” issue first.
Whenever we talk about guarantees, most people think about the downside. That is, they start to think that people will rip them off.
On occasion, it’s true — some people will. However, let’s imagine that by having a guarantee so powerful it’s hard to resist, you double your sales. Furthermore, let’s suppose that 10% of the people claim the guarantee unfairly (the number simply will not be that high — Christopher Hart says it’s 0.1 percent). Still, you’re miles ahead because of the extra business.
Why is it that people make rules for the small percentage of people who are dishonest — rules that adversely affect the huge percentage of people who are honest.
Not only that — if you have a repetitive type of business and you find some customers who are claiming guarantees frequently, then you can simply make a note of it and tell them that you’ve decided not to deal with them anymore.
Guarantees have the power to attract attention in the marketplace and that’s particularly true when you link guarantees with key frustrations.
Consider the case of an international freight forwarding company. Clearly, the marketplace is crowded and many people are undercutting their competitors. The typical sales call is, “Who are you using? What are you paying? I’ll beat their price.”
But, the company did it differently and became incredibly successful. The owner of the company, Kerry Boulton, began by applying her knowledge of key frustrations. She discovered (not surprisingly) that clients’ key frustrations were that promises of delivery dates were seldom met.
So her offer became this — your package will arrive when we say it will. If it doesn’t, we will see it as our fault even if it may be caused by circumstances out of our control (like a strike).
We’ll apologize AND carry the next three months’ freight for you free of charge.
Powerful stuff, isn’t it? And, in case you’re thinking they’d go broke, think again. Their business is booming.
Did Kerry offer this guarantee to all her customers? No. She used it powerfully to attract those potential customers that would have a significant lifetime value to her company. She used the guarantee as an offer knowing a) that she could do it anyway, and b) that having the guarantee in place would force her to develop systems to make sure it worked.
Here’s the key point. When you build a guarantee and develop systems to make it happen, you don’t simply reverse the risk — you totally remove it.
So, guarantees work. Let’s look at the specific things a guarantee should have:
First, it must be specific. That is, the customer must understand exactly what will happen if you don’t deliver on the promise you’ve made.
Second, it must be blatant — I would even say outrageously blatant. For example, a Marriott Hotel in Philadelphia puts it this way: “If, when you get into your room, it isn’t the cleanest hotel room you’ve ever checked into, the first night’s accommodation is on us.”
Or, here is one of our favorites from Al Burger, the man who runs the Bugs Burger Bug Killer Company:
“If your facility is closed down due to the presence of roaches or rodents, BBK will pay any fines, as well as all lost profits, PLUS $5,000.”
Guarantees like this one stretch the mind, don’t they? In fact, it resulted in Al Burger holding 80% of any market in which he operates.
Third, link your guarantee into key frustrations.
A great example of this is Mission Oaks Hospital. Their guarantee for Emergency Room Care services goes like this: “If you have to wait more than five minutes for emergency room care, the accounting department will refund 25% of your bill.” They’ve tracked a 25% increase in the first year alone.
Guarantees can do that for you. Al Burger puts it this way: “There are two fundamentals: the promise and the guarantee. The promise can’t simply be a marketing tool. It must be built into the operational structure, and the guarantee must be so self-punitive that producing the promised result is the only viable option.”
Guarantees have power — power to attract attention in the marketplace, power to motivate the team, AND power to improve profits dramatically.
Take the “power to motivate the team” concept. When you think about Mission Oaks Hospital, what comes to mind? Do they have systems in place to make sure they honor the guarantee? Of course. Does the guarantee make Team Members more aware of the customer? Of course. So, what could your team do?
Here are some additional thoughts you might want to consider in building your guarantee:
Unconditional: Guarantee everything under your control. By everything, we don’t mean the product necessarily. We mean the process. For example, you can guarantee timely delivery or some other part of the process, which may be important to the customer.
Unique: Promise customers something they don’t expect. For example, every contractor guarantees their work. But, how many do you know who will guarantee arrival time? How many do you know who will guarantee prompt clean up?
For example, a carpet cleaner should not guarantee clean carpet — the customer expects that. Maybe they could guarantee that the furniture will be rearranged to the customers’ total satisfaction. You see, that goes beyond what customers expect.
Financially meaningful: Although full refunds may not be practical, you must still build a meaningful guarantee with commitment.
Simple: Ideally, the guarantee should be simple to understand. For instance, “speedy service” means nothing. A guarantee like, “Your meal will be on your table in ten minutes or it’s on us,” is so much better.
Easy and Quick: It should be easy for the customer to collect. They should not have to beg or otherwise prove to you that you were wrong. Payout should be immediate.