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Should companies offer guarantees for their products and services? Or is the better question, why don’t they?
I saw a commercial the other day where the company offered a money-back guarantee for its product. That got me thinking, as these things often do, about guarantees. If we truly care about our customers, the customer experience, and keeping customers happy and returning, are guarantees a good idea? Are they a given? Shouldn’t all companies guarantee their offerings (products, services, customer experience)? After all, if they don’t, do they not stand behind their quality? Are they crap? Hmmm.
According to Google, to guarantee means to “provide a formal assurance or promise, especially that certain conditions shall be fulfilled relating to a product, service, or transaction; to promise with certainty.”
Ah, it’s a promise. Like, a brand promise, right? You do have one, don’t you?
A brand promise is a promise to your customers; it tells them what they should expect from all interactions with your people, products, services, and company. Everything you do should reflect this promise. Is that a guarantee? Or just a statement? Do you stand behind that statement? Or is it just checking a box so you can say you have one? Do brand promises and guarantees work together?
OK. I got a little side-tracked, but you can see why.
Back to the guarantee. The guarantee sets expectations, too. It says, “We believe our products (or services, experience) are so good that you’ll want to try them; you’ll enjoy them, and if not, we’ll take them back and give you your money back.” Promise made. Expectations set. Consequences outlined.
What’s the difference between a promise and a guarantee? Mainly consequences.
A promise is pretty black and white; if we don’t deliver on a promise, the result is that we lied and, hence, we failed. But there are no consequences. Technically. A guarantee, on the other hand, has conditions for failure (customer is unhappy, product didn’t work, etc.), and there are consequences (you must do something to correct it).
So, a guarantee goes beyond a promise. Perhaps we shouldn’t make a brand promise – but instead, a brand guarantee?!
What does a guarantee look like? I was recently reading Lee Cockerell’s book, The Customer Rules: The 39 Essential Rules for Delivering Sensational Service. Rule #24 is Don’t Just Make Promises; Make Guarantees.
Here are his criteria for a guarantee:
- Include explicit details. Provide clarity. Tell the customer exactly what to expect and eliminate any ambiguity.
- Tell customers how to reach you to make good on a guarantee. What should customers do if they are not happy with a product or service.
- Minimize exceptions. A guarantee should be unconditional. Exceptions really make a guarantee worthless.
- Be meaningful to your customers. I would add, be relevant to your customers. He uses the example that customers in a hurry will benefit from a guarantee for fast service.
- Clearly state the reward if the guarantee is not met. What do customers get if they are not happy.
- Make the reward easy to redeem. Don’t make them fill out endless forms or jump through a dozen hoops. Make it simple, effortless.
Christopher Hart of Harvard Business School provided his thoughts on why service guarantees work. They…
- push the entire company to focus on the customer’s definition of good service – not on your assumptions
- set clear performance standards, which boost employee performance and morale
- generate reliable data when performance is poor, i.e., every time you pay out, you have a data point for when/why performance failed
- force the organization to examine its entire service-delivery system for possible failure points
- build customer loyalty, sales, and market share
I would add that guarantees instill a bit of trust. If you stand behind what you do – at every touchpoint and at every interaction – am I more likely to trust you? Am I more likely to trust companies that offer guarantees?
Think about it. If you commit to a flawless customer experience, with consequences for falling short, will you be more apt to deliver said experience? Will customers be more inclined to interact with you?
Don’t make promises that you can’t keep.
I think guarantees work because they help reduce uncertainty and the removal of our fear of loss. Therefore, they can provide the first step towards building trust and confidence.
However, I often wonder why some companies feel that they have to offer guarantees….surely they should be a given.
Maybe they do it because they are new to the market, maybe the market doesn't have a great reputation and they need to state that they are different, maybe they are trying to improve their reputation or exploit a flaw in anothers ???
Therefore, I think firm's all need to guarantee their work but they also need to understand why they feel the need to trumpet that to all asunder too.
Thought provoking post Annette.
I used to work for a large confectionery manufacturer. They guaranteed everything (and the owners were far richer than you or I will ever be).
We had a complaints department which looked after customers who were unhappy.
There were a handful of cranks who complained about everything and repeatedly wanted their money back, maybe 10 in the UK population of 50 million.
There really is no downside to offering a guarantee, why wouldn't you?
Great story James. Enjoyed it.
A brand promise or guarantee is never a bad idea. Just make sure it creates value for the market and at the same time doesn't open the business up to exploitation.
Set the standard, meet it consistently and with great attitude and your brand will be golden.
Great perspective, Adrian. I like the thought that these should just be a given, a normal way of doing business. If a customer isn't happy, make it right. Simple as that.
Thanks, James. And perhaps it's those 10 cranks that scare so many companies into not offering a guarantee – for fear it opens the flood gates and encourages others to do the same. I think we have to worry less about that than about doing what's right and running a business ethically.
Great way to sum it up, Michael. Thanks!