Well, the short answer is yes! There you go, video over. No, I’m kidding. I guaranteed you’re going to love this video, I'm going to give you a few pearls, a few gems to help you understand number one why you should have a guarantee, and number two how you can come up with a guarantee for your business. Then I'm also going to give you an example right at the end of the video. So stick around and I'll help you understand the importance of the guarantee.
Why would you have a guarantee?
Now how many of you have been up late at night, those late night television ads come on... They’re selling those ab-ercisers and all that fitness equipment. I've never seen people look that happy, by the way, when they’re exercising. But you see somebody doing exercise and they’re smiling, and they say, ‘Three easy payments of $39.99 delivered to your door with a 30-day money-back guarantee.”
The reason that they do that is because it reverses the risk. You know that you can buy this product, get it home, and if you don’t think it’s good enough quality, doesn't work for you, doesn't do what they advertised it to do, you can ship it back. You'll get your money back. Now the reality is they make it so hard to put those things back in the box and send back that you won’t. They also certainly make them easy to fold them up conveniently and hide them under the bed so that you forget all about them.
But the reality is that they've learnt that by making these offers of a money-back guarantee, that they’re reducing the risk.
A guarantee reverses the Risk
I think it’s important for you to understand that that’s what you should be doing in your business. You should be comfortable reversing the risk. If you’re not comfortable guaranteeing your product or service, you probably shouldn't be selling it.
Essentially what it means is if after 17 weeks we’re not giving you the return on investment that you expected, we'll coach you for free until you do. So what that means is that your risk is limited to that point. You’re not going to pay for any additional business coaching if that’s what’s required to get your return on your investment. All the books and products and DVDs that I sell have a 100% money-back guarantee.
Why? Because if you get home and you don’t like, I don’t want you sitting there thinking, “Oh this is crap.” I want you to go, “You know what? It’s just not for me, and I'm returning it.” Now the reality is I very rarely, in fact I don’t think I've ever had a DVD come back. It just hasn't happened in 12 years of offering that guarantee. So reversing the risk is very, very important. It gives your prospective customers a bit of a comfort. So that’s certainly a good reason to have a guarantee.
A guarantee increases your conversion rate
The second thing that it does that is critical to the success of your business is it increases your conversion rate. Now, the conversion rate is the amount of leads that turn into customers. The higher you can get that conversion rate, the more sales you’re going to get. That’s the bottom line, isn't it..? If you've got a way of reducing the risk so that more customers buy from you and it increases your conversion rate, that has a huge, profound effect on your business that I won’t even have time to go through the whole lot of bonuses or pros of that in this video.
But the biggest benefit is that, number one, your conversion rate goes up, you need less leads. And when your conversion rate goes up, your acquisition cost per customer reduces. Which means your lifetime value doesn't need to be as great to make as much profit. Now of course you want your lifetime value to be better. I don't want to get off-track here because we are talking about guarantees, but you can see that having a great guarantee, reversing the risk, making it more comfortable for people to buy from you is going to add huge value to your business long term.
A guarantee creates a USP
The third thing that having a good guarantee in your business does is it creates a USP or a Unique Selling Proposition. Now what does that actually mean? I recently was speaking to a friend of mine, John Dwyer. He runs a company called The Institute of WOW and he has a system called; The WOW Wheel, which is a five-pronged approach to client attraction. It’s a formula that he’s got. But he talks about taking the eye off the price, and I think that’s vitally important to understand.
Having a good guarantee can take the eye off the price and you shouldn't be competing on price, you should be making yourself unique. By having a good guarantee, you are creating uniqueness that sets you apart from your competition. Because not many of your competitors may be willing to have a guarantee. You need to have a different mindset. In fact, the very fact you’re watching this video means you have a different mindset already. So the likelihood is you can come up with a guarantee that’s going to satisfy your customers that the risk is reduced enough to deal with you, and they’ll be prepared to pay a little bit more to get it.
So this is the beautiful thing about having a guarantee in your business is you can charge more. It gives you a uniqueness that should allow you to charge more.
A guarantee holds you accountable
Now another great benefit of having a guarantee, this is benefit four I guess, is that it holds you accountable. You can use a guarantee to hold your team accountable. I’ll give you an example. I worked with a sign company many years ago. Not sign writers, I don't know what they call them these days. Just sign companies I guess. They would cut out vinyl signs and install these vinyl signs. What we did was, we decided that one of frustrations that prospects in the industry were dealing with was that people would ring up a sign company, they would ask for a quote, and the quote wouldn't come for two weeks. Well the reality is that you’re a business. You want a sign, you want it today. You don’t want it in 3 days, you don’t want it in 5 days. You want it today. So we came up with a guarantee that said we would guarantee to have your quote back to you in 48 hours or your sign is free.
We said to the sales people, “If we have to deliver one sign for free because of you being too lazy to get your quotes done, you’re paying for it.” So now there’s this huge accountability on the sales people to get the quotes back quickly. Of course because we got back the quotes more quickly than anybody else, guess who got the most sales. Our conversion rate when through the roof for no other reason than the fact that we got our quote back faster than everybody else. It created an accountability within the business to make sure that we delivered in a timely fashion.
You can use that example, you can use that on just about any part of your business. It could be to do with quality control. You might go out and repair things in your business, and you might say to your customers, “If it’s not repaired to your satisfaction, we'll come out and repair it again for free. And in addition to that, we'll give you 100 bucks.” So all of a sudden you've got this uniqueness or this USP.
Now how do you create a guarantee?
That’s a good question, and I've got a good answer. I think the best way to do it is to grab a pen and paper and write down the three biggest frustrations of people dealing with your industry. Not you, with your industry. So I'm going to use plumbers as an example because it’s something that we can all relate to...
Write down the top three frustrations that you feel when buying, or trying to buy from a plumber. Top three frustrations. I know you’re thinking about that now. Top three frustrations that you feel or go through or experience when you’re trying to buy from a plumber. I'll give you another ten seconds or so. Top three frustrations. Now I can guarantee that the frustrations you've written down are these, number one, they don’t turn up or they don’t turn up on time. That'll be your number one frustration. Number two, they make a mess. They leave a mess everywhere. Number three, they overcharge. Now you might have something slightly different than that, but I can guarantee that at least one of those is on your list. I guarantee.
Now if I'm going to deal with a plumber, and I know that those are the three things are likely to happen to me if I deal with a plumber, a smart plumber is going to guarantee that those things aren't going to happen. If you want to deal with a plumber, and you've Googled plumbers on the Internet and you came up with a plumber and his homepage (or her homepage) said, “At last! A plumber that guarantees to turn up on time, leave your house cleaner than when we arrived, and give you a fixed price that won't change no matter what, guaranteed, or you get double your money back, or you get your work free,” something like that. Are you going to call that plumber? Well of course you are. They've now said they guarantee those things will happen.
Now that plumber needs to make sure their business is built solid and their systems and training and processes are in place to make sure those things carry out. So once again it creates accountability. Remember I said that the point was to hold accountable? It creates an accountability for us now to deliver a service at a certain level, and it’s a level that we should be delivering it at. But it gives us a uniqueness over and above our competition because there’s not a lot of plumbers that would be happy to guarantee that. Now every now and again are you going to do a job for free or pay them double their money back? Of course you are. But can you charge more?
The answer is a resounding yes!
About the Author
Ben Fewtrell is a sought-after Business Coach, Keynote Speaker and trainer who has featured in Virgin’s Inflight Magazine and Entertainment Portal, SKY Business and “Secrets of Top Business Builders Exposed”. He is also the host of the popular Business Brain Food Podcast where he interviews leading experts on anything and everything business.