Authored By: Jim O'Donnell
"Satisfaction guaranteed" is a phrase not commonly heard. Many senior executives and small business owners are afraid to express these words to their customers and prospects. The primary reason for this is a concern that one may actually have to provide free products and services, or possibly refund hard earned revenues because of a dissatisfied or disgruntled customer with unreasonable expectations.|
However, offering a guarantee is a bold approach that implies confidence in your company's products or the ability to deliver a service as promised. This may be just the Savvy Strategy that will set you apart from your competitors and will win you the order. Additionally, guarantees are an excellent strategy for gaining long term customer loyalty. If this is a strategy your company wants to implement, how do you structure a guarantee and what should you guarantee? At what point in the sales cycle do you offer a guarantee and what conditions should be included?
Product guarantees are much easier to offer and define than are service guarantees. With a product it is far easier to control the customer's expectations. You can define the product with technical specifications, determine how it is supposed to be used, specify performance levels, describe the circumstances under which it will function effectively, and when its use should be avoided. Also, it is generally easier to determine if a product has been abused or misused.
Service guarantees are much more difficult to define because the results are often intangible and personal satisfaction varies from individual to individual. What is acceptable and satisfactory for one person may not be so for another person even though the same level and quality of service was delivered to both parties.
I am familiar with an Organizational Dynamics Consulting firm that provides customized training for organizations on how to achieve high performance through organizational effectiveness and personal achievement. This firm has a unique way of conducting business. They offer a no-cost, no-obligation, organizational assessment to interested businesses. This assessment allows them to adequately determine how they might be able to help the customer. A proposal is then prepared that defines the services to be delivered, and, more importantly, establishes the appropriate customer expectations. If, for any reason, or at anytime during the contract, the customer feels their expectations are not being met, the customer can cancel the contract and have all their payments returned. Conversely, this firm will, without hesitation, cancel a contract if they don't feel that the customer's commitment to the project is greater than theirs, or if they determine during the delivery of the services they are unable to fully achieve the customers objectives. This philosophy is explained prior to beginning any services and notifies the customer that satisfaction can only be achieved if both parties make a full commitment to achieving the pre-defined objectives.
This approach to offering a guarantee accomplishes several things. First, it conveys confidence to the customer that the firm can, and will, satisfy the client's objectives. Second, it gives the firm the confidence that once the customers objectives are mutually defined and agreed upon, they can deliver. Third, if it is determined the customer is not satisfied in the early stages of a project, the losses can be minimized. Fourth, the firm has maintained complete control of the project, the customer's expectatations, and the ability to cancel the project, if necessary, due to the customer's lack of commitment.
Some helpful hints for utilizing guarantees are as follows:
Guarantees are most effective when you are either a new or a small company. Some clients may be reluctant to do business with an upstart that has little or no track record. This particularly applies to a home based business or a first time contract. The customer's perception of risk is far greater in these instances and they will want some assurance you can succeed. Offering a guarantee may tip the scales in your favor. A guarantee is both their security blanket and your competitive advantage.
- Carefully evaluate the contract to determine if you can effectively deliver on all the requirements that will either meet or exceed the customer's expectations
- Only guarantee the contract to the maximum amount of the contract. If the contract has several definable phases, guarantee only the costs of each one of the phases you have completed. Do not guarantee against third party claims, lost wages, or lost productivity.
- Don't accept a contract unless you are absolutely certain you can deliver on all the requirements.
- Define in writing, the customers expectations. The longer the contract, the higher the probability of changes in the customers original expectations. While memories tend to fade over time, a written agreement will help minimize potential conflicts and will serve as the baseline for discussion.
- Do not allow the customer to attach unreasonable requirements to the contract.
- Allow adequate time for completion of the contract. Always build-in a safety factor.
- Use a guarantee to your advantage by allowing it to serve as a motivator for you to perform at the highest level as well as an incentive to deliver on time. Sometimes the fear of a loss is greater than the desire for gain. Use this to your advantage.
- Don't guarantee what you can't guarantee. Only guarantee the events and circumstances you can control. If you have a one or two person business, it is much easier to offer a guarantee than if many people in your company are adding value to the project. This is also true if you have to depend on subcontracted services or other third parties to satisfy the requirements of the contract.
- Don't be alarmed by a customer who threatens to "call-in" their guarantee. They may be presenting you with a painful experience, but this situation can also serve as an opportunity in the form of a quality control mechanism or as forced market research. Use this event as an opportunity to receive feedback on the quality of your services and to determine if your services are truly meeting the needs of the marketplace. This will cause you to more adequately define the results you can guarantee on future contracts as well as the type of guarantee you will be able to offer.
- The guarantee should be in writing, easy to understand, and easy to execute.
- Never make the guarantee unconditional and all encompassing. Every guarantee has some qualifiers and should easily meet the "Prudent Man" test. It should not invite someone to take advantage of you. Most customers are generally quite reasonable, but the occasional customer looking for something for nothing still exists.
- The guarantee should be believable. Outrageous guarantees of recovering, for example, ten times the cost of your services if you can't deliver as promised are not reasonable, especially from a small or upstart company. Certainly, your client won't believe you can afford to offer this type of guarantee.
- The longer the guarantee, the more value it has to a customer, and the more security it conveys.
- It is not necessary to offer the same guarantee to all of your clients. Clients have different needs and varying levels of tolerance for risk. What is the key concern or underlying fear that you can guarantee for your customer or prospect?
Many large companies don't offer guarantees because they have developed a good reputation for their products and services, have been in business a number of years, and have acquired many customer references. After your company has developed a reputation for excellent performance with good client references, you too will also want to consider minimizing and phasing out guarantees or eliminating them altogether.
Take the next step! Contact us at (603) 642-8338 or email Jim O'Donnell today for a No-Cost, No-Obligation phone consultation to discuss how Jaguar Consulting can help implement some savvy marketing strategies.