Guarantees Guarantee Sales!

Guarantees Guarantee Sales!
 

The year 2009 has seen the emergence of a much more risk adverse consumer market than previous years. With many consumers feeling jittery after the credit crunch and global downturn, they’re more reluctant than ever to open their wallets to an unknown business, product or service.
 

Let’s face it – 8 out of 10 potential customers who visit any business are sceptical in one way or another. They wonder whether your product or service will live up to their expectations and if they’ll receive the value that they were promised at the point of sale.
 

The customers that believe your promises are the ones that end up buying from you. And if you deliver as promised they’re the ones that will end up buying from you again. Trust sells. So how do you build trust and take away the risk?
 

It’s easy. Give them a GUARANTEE!
 

The truth is that putting a guarantee in place in your business will have a dramatic effect in attracting and converting new customers, and have a massive impact on your bottom line. Here is an example of what happens when companies put in place guarantees:
 

A Perth-based safety shoe company Steel Blue was so confident that their safety boots were a winner that they took a risk – offering a 30-day money back guarantee, or promising to buy a customer a pair of their competitor’s shoes. This was a world first – the only safety footwear brand in the world to be sold with a money-back guarantee. The result took some time but paid off – Steel Blue’s sales grew 25% a year for the last six years; selling around 900,000 pairs of safety boots in 2005-06 – despite the fact that the boots are more expensive than their competitors.
 

The 7 rules for developing a guarantee:
1. Minimise the conditions – The harder you make it to claim on the guarantee, the less effective it will be in generating sales and converting potential customers. Customers will feel that you have something to hide.
2. Maximise the pain – The greater the negative effect to your business in offering a guarantee, the more powerful it is perceived to be by your customer. For example, if you were to offer a 200% money-back guarantee (rather than just 100% money-back) you could expect your conversion rate to dramatically increase.
3. Mention reasons why – The more of a story you can tell about the reasons why you are offering the guarantee, the greater the credibility your guarantee has. This also means you’ll experience a greater response in increased conversion and sales. For instance, you could reassure your customers that your product is of highest quality but if they are at all dissatisfied with your product or service that you will give them their money-back, no questions asked.
4. Shout it from the roof tops – Be bold, spread the word and let everyone know about your guarantee so that anyone that has contact with your business is aware of your guarantee. Mention it in every area of your business, in outside signage, point of sale materials, on your website, brochures, spoken by your sales people, all advertising, receipts – mention it everywhere.
5. Maximise credibility with graphics – It’s important that your customer perceives the guarantee is REAL and your company is credible. For example, putting your guarantee inside a frame with a ribbon seal will have a significant psychological effect on your customer.
6. Package your product well – If you sell products via mail order wrap your product so that the customer needs to rip open the contents and damage the packaging to get to the product. This will help reduce the amount of people who claim on the guarantee because people are much less likely to return something when the packaging is damaged.
7. Ask customers to ship it back – Again if you are a mail order business, make it a condition for the customer to return the product before you give a refund minus the postage and handling costs. It helps to reduce dishonest guarantees.
 

A guarantee is one of the best risk-reversal techniques a business can offer customers. It helps to give them a sense of security when they purchase your product or service knowing that if it doesn’t live up to its claims, they can return it for a full refund. On the other hand, the small number of returns as a result of the guarantee is offset by the dramatic increase in turnover.