Many new business owners ask me, “Should I offer a guarantee? I know it will help sales, but the risk really scares me.” I offer guarantees on most everything I sell, but that doesn’t mean you should too. Here are some factors to consider and some ideas to get you started.
The Pros:
A guarantee puts your prospect at ease, giving her no reason NOT to buy or NOT to work with you. After all, if you don’t stand behind your product or service 100%, what are you doing in business?
This is especially true if you’re selling products via the Internet. People at your website don’t have the chance to meet you in person and see that you’re legitimate, so it’s your job to give them complete confidence in buying from you.
The Cons:
With some service-based businesses such as consulting, it may be hard to guarantee your work or your results. (Especially if your clients’ cooperation is required to ensure their success.)
Also, a few turkeys may capitalize on your generosity. For example, my “Boost Business With Your Own E-zine” system was originally an e-book when I launched it a few years ago. It would not be unusual to see a person purchase it, download it, and request a refund 2 minutes later. Obviously they hadn’t even read it yet and they just wanted to get the information without paying for it.
But in my experience with Internet *info-products*, the amount of sales you GAIN from offering a guarantee dramatically outweighs the risk. (Once you get into coaching programs, it’s a whole different ballgame. That’s another article to come later.)
Types of Guarantees You Can Offer
“Money Back” or “Satisfaction”: You promise to refund your customer in full if the product does not work or if she’s not happy with your product.
“Price-Protection”: This can mean either locking in a price forever, such as with services or memberships that are billed on a recurring basis, or guaranteeing that you have the lowest price anywhere for that particular service or product.
“On-time”: If your clients are always concerned about getting your service or product on time, this is a good one for you.
And these are just a few ideas!
Should You Make it Easy, or Hard?
Some business owners make their customers jump through hoops to get their money back. While I understand not wanting to make it TOO easy to get an instant refund, there are risks. If you make it really hard, your customers may just skip dealing with you and go direct to their credit card company.
This process is called a “chargeback”, which can reflect negatively on your vendor merchant account standing as well as result in penalty fees for the vendor. So obviously, as a vendor, you want to avoid chargebacks by making the refund process easy for your customers.
(However there are definitely times you can fight back and win, when you are in the right.)
Should There Be a Time Limit?
Setting a time limit is up to you. Common ones are 30 days, 60 days, 90 days, a year, or a lifetime. Some studies show the longer the guarantee, the less returns you’ll get. Why? Customers are more likely to mark their calendar regarding a shorter guarantee. With a longer guarantee, they don’t feel pressured, so many of them forget about it.
How Should You Word It?
There are many ways to word guarantees, so to get started, I’d look at the standards in your industry. For information products, many people are modeling the guarantee I have on my Boost Business With Your Own E-zine System sales page.
Feel free to do the same or modify it to your liking. I won’t mind at all!
© 2003-2009 Alexandria Brown International Inc.
Self-made multimillionaire entrepreneur Ali Brown is devoted to creating financial freedom for women globally through the power of entrepreneurship. To learn how to create wealth and live an extraordinary life now, register for her free weekly articles at www.AliBrown.com