Businesses and Guarantees

Today’s market has evolved greatly from a decade ago. Today, customers have no problem finding a vendor in any medium – whether it be physical or virtual – to satisfy their needs. Indeed, they are flooded (if not overwhelmed) by the sheer number and variety of choices out there. To get the consumers’ attention and to stand out from the competitive crowd, different companies use different tactics, and one way that is getting increasingly popular is by using a guarantee on the product or service.

What purpose does the guarantee have in a transaction with the consumer? Its use is mainly four-pronged:

1. Customers whom are unsure of whether to try the product or service in the first place are given an extra incentive;
2. Customers who want to try the product or service, but have difficulty in making a choice between companies, will have peace of mind with the guarantee and thus commit to a purchase;
3. Companies who can give a guarantee appear to be customer-oriented in that they ensure there is some sort of after-sale care;
4. And some consumers take it as a testament of faith to the product. They feel that it is implied with the guarantee that it must have few or no dissatisfied customers.

Usually companies who give guarantees promise a product replacement, a refund, or some sort of compensation should the product or service prove to be unsatisfactory. They do this all in the hopes of baiting the customer into making a purchase.

And it has worked for many companies. Take for example industry leader Xerox, who has built up a strong following with its promise to replace any Xerox product within three years until the customer is satisfied. Aldi, the supermarket chain that produces a multitude of items under its own home brand, promises a full refund or replacement if you aren’t 100% satisfied with the product.

But before you start jumping on the guarantee bandwagon, think long and hard about how willing you are to honour the guarantee. Great guarantees normally comprise of the following qualities:

• Uncomplicated
• Trustworthy
• Relevant to the customer
• Unconditional

The guarantees must be honoured without fail.The guarantees must address the customer you are targeting. If you are an airline targeting high-end business travellers, your guarantee of comfort and great service would interest them more than a guarantee of the lowest price available. If you are a restaurant targeting families, the promise of a kid-friendly atmosphere would be more relevant than the promise of creating a romantic atmosphere.- The guarantee must be believable. If you rode on an airline that gave you miles that expired within 3-6 months, would you be happy about it? Or would you feel that the company is an unethical, gimmicky corporation that was trying to fool you instead of cultivating a good relationship with you? The guarantee is easy to understand to the average person, instead of needing a lot of clarification.

Keeping this in mind, ask yourself: would you be unwilling to be on the side of the customer even if you think that he or she is being unreasonable? Will you give the customer a hard time about making use of the guarantee? Will the customer have to jump through hoops to convince you to honour the terms of your guarantee? Are you planning to sneak in some sort of condition into the guarantee so that you can evade it if you want to?

If your answer is “yes” to any of the questions, then a guarantee is not for you. Do not think that you can craftily word your guarantee to sift through consumer claims, and do not think that if a small band of customers appear unreasonable you can choose to dishonour their claims on those grounds. A good guarantee is without exception, and by saying so, you promise to honour it no matter what. Anything otherwise, and you will damage the integrity of the guarantee, and in the process, the image of your company, which will be hard to salvage. Do not turn what started out as loyalty tactic into a disloyalty one. You will be burning the whole forest for the sake of a few trees.

Trying to be “creative” with your guarantee wording will also cause you to create a group of angry customers who have found out the truth. They will denounce your company to anyone who will listen, and in the past it was found that a dissatisfied customer would discredit the company to ten other people. In today’s age of information, they can easily reach hundreds at the click of a button! And just think, one angry customer a week becomes fifty-two in a year. Fifty-two people advocating the death of your company equates to five hundred and twenty listeners, who might pass the message on. Their disparaging testimonials is likely to be more damaging and hard to control than any other variable in your marketing plan.

As with any marketing tactic that is used, you must remember that there is no “your side” and “their side”. The customer is king, and with every dollar they spend, they are voting if your company should survive or not. So start thinking about how to help the customer, because if you do not stand with them, then you have already lost the war.