When a potential customer considers purchasing from your business, are there a number of risks to completing the purchase?
Will the product or service solve the problem they have?
Will it meet the needs or wants of the customer?
Will the benefits outweigh the costs?
Eliminate purchase risks
When you provide a guarantee, you remove the risks to the potential purchaser and make it easier for them to buy from you.
It is reasonable to assume that if you reduce the risks and make it easy to buy, more of your potential customers will convert to actual customers and make the purchase. This is a good thing.
5 tips to make a great guarantee
1) Position it clearly and boldly to potential customers: The worst guarantee is one that customers don’t know about.
This may sound ridiculous, but as a small business advisor I often discover businesses that have a guarantee but didn’t tell their customers about it at the time of the purchase decision. This means the guarantee was not needed for the purchase decision of the customers that bought because they didn’t even know about it. The potential customers that didn’t buy could have been a customer, but they didn’t know about the guarantee and decided it was too risky to make the purchase.
2) The stronger and bolder the guarantee – the better – a watered-down guarantee just doesn’t work.
Make it big, make it bold
The idea is to get more customers to buy confidently, so big and bold gets more attention in the marketplace. I often see big resistance to make it bold. This is typically because of the fear the market will take advantage of your guarantee. The reality is that a very small percentage probably will, but the percentage is typically less than 1%. The profits from the other 99% of new customers will be more than the cost of dealing with the unsatisfied 1%.
3) Be specific how you define the “claim” – As the business that is developing the guarantee, you get to determine the rules for a claim.
While the guarantee needs to have some meat and be easy to use, you control the details. Make it ‘if this, then that’. For example, ‘If this tree doesn’t live for one year from purchase for any reason, then we will replace it for no charge.’ In this example, the claim was not cash but a free replacement which costs less to the business that a full refund.
4) Test it first – If you are worried about how the guarantee will work and if anyone will abuse it, then test it in a controlled manner. You can offer it to a limited group of potential customers to see how it works. Then you can tweak it based on how the test works out.
5) Research the existing guarantees in other industries – The design of a great guarantee does not have to come from your industry. There is no need to re-invent the wheel. If you just focus on the current purchase decisions you may be making yourself, you can experience how and if a guarantee affects your risks of making a purchase.