Consider this fundamental point in business; 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:
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 YOUR way to your business and in a DIFFERENT way perhaps for your selected clients.
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 XXX, so even if you decide to get your money back, you’ll be XXX ahead just for trying our product.”
Stated that way, it’s almost irresistible, isn’t it?
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, 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 apologise 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 they offer this guarantee to all their customers? No. They used it powerfully to attract those potential customers that would have a significant lifetime value to the company. They used the guarantee as an offer knowing a) that they could do it anyway, and b) that having the guarantee in place would force them to develop systems to make sure it worked.
Take your business to the next level with help from our experienced team of Chartered Accountants and Business Advisors. Call us in Auckland today on 09 520 9200.