The following article appeared in the Globe and Mail on 17/03/05. It covers a topic we have addressed before, but it remains valid and powerful if you act on it.
Timothy Eaton had it right 120 years ago. His slogan – “Goods satisfactory or money refunded” revolutionized Canadian business. At a time when the consumer’s only protection was “buyer beware,” Eaton took the risk out of shopping at his stores by taking responsibility for the consequences.
Many retailers today still promote money-back guarantees. But few other businesses do
And that’s a key reason they find it so expensive to attract new clients: They make customers assume the risks of doing business with them. Guaranteeing results is a sure-fire way to attract new customers. And the stronger your guarantee, the better.
Business is all about trust. Peddle all the features and benefits you want, but people will seldom part with money until trust is there. But building trust takes time – and hesitation kills businesses. So do away with the dithering by reversing the risk.
After all, who would you rather buy from:
A business that says, “We have great products, and you can try them if you pay us first?”
Or one that says, “We believe in our products so much that if they don’t do what you want, we don’t want you to pay”?
The difference could have a huge impact on customers’ readiness to do business with you.
A friend of mine who wrote a book on sales techniques made this offer on the last page: If after applying the concepts in his book some readers don’t see a substantial increase in sales, they can return the book to him personally for a no-questions-asked refund.
That pretty much eliminates customer hesitation. It also shows what great confidence the author has in his product. Better still, he says, no one has ever returned a copy of the book.
I’ve run a number of companies, from consulting to human-resource development, and I have always offered a money-back guarantee. I believe this has boosted my sales significantly. It gives me an advantage over less confident-seeming competitors, and it’s a great deal-closer. Yet I have never had to pay out a penny.
That doesn’t mean no one ever calls me on my guarantee. I have had to handle a few customer complaints. But here’s the other benefit of a guarantee: it encourages unhappy customers to contact you.
Instead of walking away (and possibly bad-mouthing your product to future prospects), unhappy customers call and explain their problem – giving you an opportunity to fix things.
My experience is that sincerity and creativity can satisfy most customers’ problems – and help retain clients who might have otherwise been lost. Will some customers take advantage? Sure. I know someone who complained to Sears about a table they bought 15 years earlier. They ended up getting a full refund. But now they won’t shop anywhere else, so even that deal benefited Sears in the end.
Most people won’t abuse your trust. And if you qualify your guarantee as my author friend did (by offering refunds to those who had actually implemented his program), you will discourage troublemakers who haven’t even given your product a chance.
In reality, many businesses will refund an unhappy customer’s money. So why not make it an explicit benefit? Build this offer into your advertising and sales pitches.
Just make your offer as powerful as possible. A 60-day guarantee is good, but a one-year guarantee is better. (It offers buyers more value. But it also reduces the deadline pressure to return the product.)
I like to offer a “better than money-back” guarantee. Offer customers a gift for trying your product or service. If they are dissatisfied, they will receive a full refund, but they also get to keep the gift.
If you already have a quality product or service, your job is to attract customers’ attention and build trust.
So break out of the timidity trap. Stand behind your product and watch customers take note.