The Way To Success

The subject of this article is guarantees. If you are not offering them on your products and services you are probably missing a prime opportunity for increasing both sales and profits.

Most business owners shy away from offering guarantees because they fear being ripped off. But is the fear justified? We will examine both the risks and the rewards below.

If you don't feel your product is good enough to guarantee, why should a total stranger feel it is good enough to buy? If your product is shaky, seriously consider dropping it. There are an infinite number of things to offer for sale. Don't settle for shoddy merchandise when you can be making more money by offering quality.

Now, if you are currently offering a quality product, then the rest of this article is for you.

Rewards

The rewards of offering substantial guarantees are:

* more sales
* higher profit
* ability to charge more
* greater competitive advantage
* and, paradoxically, fewer returns.

Risks

There are risks, though.

There is the honest risk of merchandise being returned for a refund because it genuinely should be. That is a risk that any ethical businessperson should be willing to take. After all, if a customer came to you with a defective widget and asked for a refund you would probably give it to him, right?

So why not profit from it by telling people in advance that you will do so?

But the real fear is that a dishonest person will take advantage of you. Will that happen? Probably.

But it doesn't matter, because for every person who takes advantage of you, many, many more will buy from you because of your guarantee.

The numbers are in your favor for three reasons:

1. More people are honest than dishonest. (If that's not true in your line of work, perhaps you should consider a new line of work.)

2. Most people are forgetful. They will forget whether you offered them a 6-month guarantee or a 12-month guarantee. Or exactly when they bought it from you. Or even that you offered a guarantee.

3. The natural human tendency toward laziness will work in your favor. Even if they are somewhat unsure whether they got their money's worth, most people will be reluctant to look for their sales receipt, package up the product, and return it to you.

Rules For Guarantees

* Make them as strong as you can. Your confidence in your product will inevitably result in increased sales.

* Make them as long as you can. Studies have shown that returns usually drop when the guarantee period is lengthened.

* Set up your policy for "normal returns"; i.e., refund requests for valid reasons. Make your refunds quick and painless for the customer. Then they will remain happy customers and buy lots more product from you. Studies have shown that an unsatisfied customer who is properly handled almost always becomes a loyal customer.

* Decide how to handle "difficult customers." Somewhere along the way, after you have made lots of money from your new "super guarantee," someone will try to rip you off. Let them. Your extra profits are already in the bank. Just refund their money, or whatever your guarantee is, and sever the relationship.

Examples

Win-Win Marketing Small Business Newsletter

On our newsletter we offered a double guarantee:

1) Each issue had a "total satisfaction or it's free" guarantee.

2) Subscribers could quit at any time and get a full refund on all unused issues.

In our first 15 months of newsletter production, guarantee #1 had been exercised exactly once, and guarantee #2 had also (for a man who went out of business).

Guarantee #1 is the strongest guarantee we have ever seen. We thought long and hard before deciding to offer it. And yet only one person ever used it. And only on one issue.

Jay Abraham Seminars

Jay Abraham is an expert on marketing. He came up with a seminar program that promised to transfer all his inside secrets on how he became a millionaire through marketing -- for the sum of $15,000! And later he raised the price to $20,000! And he sold it with a 16-page direct mail letter!

How? By offering two guarantees:

* Anyone could leave after the first day and get their uncashed check back.

* Anyone using his methods for 18 months was guaranteed to earn their seminar fee back -- or get the difference refunded.

Primarily on the strength of these guarantees, he enticed over 900 people to give him, a total stranger, $15 to $20 thousand dollars.

I know, because I was one of them. And no, I didn't ask for a refund, because I got my money's worth.

How many people do you think he would have enrolled without the guarantees? Probably none.

Nordstrom

Nordstrom is a high-end clothing store. They take their guarantee so seriously that once they made a refund on a set of tires returned without a sales receipt, even though Nordstrom has never sold tires!

Conclusion

If your product is good, guarantee it. The biggest risk you face is operating without a guarantee.