Guarantees with Oomph

by Marcia Yudkin

Not long ago a real estate appraiser asked my opinion of his new brochure. "'Guaranteed on-time appraisals,'" I read out loud. "You mean that if it's not on time, the customer gets a refund?"

"No, I couldn't do that," he replied. "So many times things get delayed for reasons outside of my control."

"What do you mean, then, by 'guaranteed'?"

"Never mind, then. Strike that out. We couldn't give people their money back every time an appraisal was late."

He'd come close to landing his business in serious trouble. The word "guarantee," like the word "free," has a specific meaning that the Federal Trade Commission and state attorneys general enforce. Without any explicit qualifiers attached, "guarantee" means that the customer has the right to a 100 percent refund if the product or service disappoints them - no "ifs," "ands" or "buts."

Further, because of the well-known strength of the word, a guarantee holds a powerful potential to increase business. I explained to the appraiser that an on-time guarantee would probably boost his business enough to cover the occasional refund. We then restated his guarantee to read, "We guarantee that we'll deliver your appraisal by the promised time, or it's free." He'd cover his flanks by being careful about the promises he made.

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Like a sharp knife, guarantees can cut through a prospect's skepticism and fears. Handle them with care, but include them in your business's toolbox.

• Try a long guarantee. The longer the guarantee, in fact, the fewer refund requests a business receives. If your competitors offer a 30-day money-back guarantee, extend yours to 90 days, a year or even a lifetime.

• Depending on your business, consider a performance guarantee instead of promising a refund. For example, a termite-control customer might prefer your promise to make the problem go away, no matter what it takes, to getting her money back if the treatment doesn't wipe out the pests.

• If you can stand behind outrageous-sounding guarantees, go for it, as in, "We guarantee that your credit-card application will be approved by one of the listed banks, or we'll return every penny you paid us, plus $10.00 extra for your trouble." Since this company knows that only 4 percent of applicants get turned down, their offer motivates without bankrupting them.

• Try guaranteeing some aspect of your product or service rather than the main product or service itself. One advertising firm promises that all calls will be returned in less than one hour, or the caller receives a $25 gift certificate to a local restaurant.

• Act graciously and promptly when a request for a refund comes in. See what you can learn from the customer's dissatisfaction. Software returns were killing one catalog merchant until she wrote the catalog copy more carefully and tested it on her friends for clarity. Customer service research reveals that people whose complaints are handled well often turn into more loyal customers than those who never had a problem!

Copyright 1999 Marcia Yudkin.  All rights reserved.

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