Guarantee increases buyer confidence and encourages completed transactions.
A lot of the businesses I work with don’t have a risk reversal strategy (guarantee), and aren’t really familiar with what one looks like, or the power it could have over their conversion rates.
Each time a customer completes a transaction, they leave your store or website with 99% of the risk associated with the purchase. Even if you overcame all of their objections and answered their questions about the performance of the product, the moment they hand over the money they lose their leverage.
If the product/service doesn’t do what you say it will, or if it breaks down, your customer has parted with their cash and hasn’t received the promised results. They’ve lost – or wasted – money.
So, risk reversal simply means taking the purchase risk away from the customer, and taking it on yourself or your business. When your business allows customers to make purchases without fear or doubt, you will encourage them to make decisions, spend money and complete sales because there is less at stake.
And whenever you can encourage more customers to buy from you, you will boost your conversion rate and your average number of transactions. So, offering a strong guarantee is a strategy that will increase conversions as well as repeat business.
This article will cover:
- The relationship between risk reversal and conversions
- How to use guarantees in your business
- How to handle returns and claims
- A step-by-step process for creating guarantees
A strong guarantee will reverse purchase risk and increase your conversion rates.
Essentially, guarantees take qualified leads and quickly convert them into repeat customers. When you guarantee what you sell, you take away the purchase risk from your customer and assume it yourself. When the purchase risk is taken away from the customer, they are more likely to agree to make purchases and you will close more sales.
People don’t like to be wrong, or feel that they have been misled. They want to be sure that they made the best decision when they purchase a refrigerator or a new pair of shoes. They want the products and services they buy to actually deliver the results and benefits advertising. They are afraid of making the wrong choice when they spend their money.
When you provide a guarantee, you break down these natural barriers in the sales process, and the fear inherent in making large purchases. Guarantees usually shorten the sales process altogether because there is less need for discussion about objections. The customer feels that they can try the product out, risk free.
The best guarantees are big and attention grabbing, but still realistic. They’re bigger and better than the competition, but still something you can actually stand behind. They tell your customer that you have confidence in your product, and that you “must be good at what you do” or you wouldn’t guarantee it.
Guarantees and hassle-free return policies are also becoming the norm amongst many retail businesses and even service providers. There is a growing consumer expectation for returns policies that default to the opinion or experience of the customer. A guarantee or easy return policy can be the difference between choosing one business over its competition.
But aren’t you worried about unhappy customers? Won’t you see a pile of returns and service claims?
When I suggest implementing a risk reversal strategy to my clients, most of them are a little concerned. Most of them say something like, “Sure, I’ll increase sales with a strong guarantee, but won’t the increase in returns and service claims put me out of business?”
This is a valid concern. Of course, there are going to be customers who come back to you unhappy, or who want to take you up on your promise or guarantee. When you offer your customers a strong guarantee, you need to make sure that you stand behind what you are selling and believe in the benefits or results you’re promising.
Don’t guarantee anything you don’t believe you can deliver.
Before you even think about guaranteeing results or benefits, you need to make sure that you stand behind what you sell 100%. You need to believe that your offering is a quality product or genuine service that is of value to your target market.
If you’re concerned about the quality of your products or the service you provide, consider making improvements internally before you promise anything to anyone. If you employ staff who perform a service, make sure they’re qualified and skilled at what they do. If you sell merchandise, put stronger quality controls in place, or consider buying from other vendors.
The reality is that you will get returns. Some customers will come in to scam or to take advantage of you, and I’ll show you how to create a system to handle this. However, the point of offering a guarantee is to increase conversion rates (and revenue), so as long as the increase in sales is greater than the cost of the returns and claims, the strategy is working.
The majority of your customers would never take advantage of your guarantee.
The second important point I want to make is that most customers are too lazy or afraid of confrontation to take you up on your guarantee – regardless of how satisfied they truly are.
Your customers are too lazy to return to your store or send back the item they purchased. The same goes for services. Most let the specified time period go by, and simply forget about your promise. You may have even done this yourself.
Also, the level of confrontation involved in returns and service claims is usually more hassle than the customer is willing to deal with. Telling someone that you don’t like their product or service can be challenging, and many don’t have the confidence to do this.
So, once you’re ready to stand behind what you offer, work through my easy, step-by-step process for creating your guarantee.
- Decide what you are going to guarantee, and what you will offer customers if the product or service doesn’t deliver.
Based on your knowledge of your target market, brainstorm a list of things that they look for or value in your products and services. Then, brainstorm a list of things that may frustrate them about the purchase experience in general. Perhaps they hate it when contractors show up late, or when take-out takes forever to arrive. Or, maybe it irritates them when they open a product package and items are missing or broken.
Here are some questions to ask yourself when brainstorming for your guarantee:
- What does your target market value most about your product or service?
- What frustrates your target market about your industry, or product line?
- What objections do potential customers raise most often?
- What is the level of risk that your customers take on in a purchase?
- How much time do customers need to truly evaluate the product or service?
Guarantee results, not features or benefits.
Remember, people buy results, not products or services. You buy younger-looking skin, not a spa facial. You buy a fresh-cut lawn, not a built-in lawn sprinkler system. Therefore, the strongest guarantees are made on results not features or benefits.
Take the items in your brainstormed list and identify a number of things that you can guarantee won’t happen or will happen. Don’t be afraid to think big – you can promise a lot more than you think. Once you have chosen a few things you can guarantee, make sure you:
- Get detailed.Be clear about what you are guaranteeing, and phrase your promises carefully. Different words mean different things to different people, so ensure you are claiming something measurable. Two customers may have different ideas of what makes a product “work” or “last a long time.”
- Get specific about timeframes.Give customers a realistic amount of time to experience the product or service – very few companies can guarantee any product or service forever. Usually 30-days to 90-days is an adequate timeframe, depending on the purchase. This gives customers a deadline, and protects your business.
- Are bold, yet realistic.Don’t be afraid to get a little unbelievable you’re your guarantee – it will grab your customers’ attention and may make you stand out above the competition. Just be sure to be realistic and make promises you can deliver on.
- Clearly explain compensation.If the product or service doesn’t do what you say it will, what will the customer get, or how will you resolve the situation? Make this a big part of the guarantee, be specific about money, and try to go above and beyond a simple money-back refund.
Here are some examples of strong guarantees:
- All of our products are guaranteed to make you feel stronger and healthier in seven days, or double your money back – no questions asked.
- Our services are guaranteed to be the lowest in the region. Find a lower price, and we’ll beat it by 20%.
- You’ll be completely thrilled with your haircut and color treatment, or we’ll make it right, right away, at no extra cost to you.
- Buy any product in the store and test it out for 30 days. If for any reason – or no reason at all – you’re not completely satisfied, return it for a full refund.
- We guarantee you won’t find a lower price in town – or we’ll pay you double the difference.
- If you find any defect in our installation within 90 days, we will fix it within a single business day at no extra charge, guaranteed.
- Tell your customers about your guarantee.
Just like you did with your marketing message and your powerful offer, put your guarantee in places where your customer will read about it.
Include guarantees in your advertising, on your website, on receipt tape, in-store signage and newsletters. There are also many small ways to place visual reminders of your guarantee around your business. For example, put a small sticker that says “results guaranteed” on your merchandise or price tags, and modify all in store signage to mention your promise.
You can also send a newsletter or email to your database of existing clients to let them know about the new guarantees. You may encourage past customers to return, and single-transaction customers to become lifetime customers.
- Train your staff on the details of the guarantee.
Script the details of your guarantee as part of the sales process to give your staff an easy guide to follow. Be clear on what is guaranteed, what the guarantee covers, and the process for claiming the guarantee in the unlikely case the customer needs to. If you decide to offer different guarantees for different products or services, make sure those differences are made clear.
In most cases, your employees will be the ones on the sales floor, using the guarantee to boost their sales targets. It’s easy for a staff member to make broad or false claims during the sales process to earn the sale, but it may result in an increased number of unhappy customers coming back to return the item.
Clear, in-store signage that promotes and describes the details of your guarantee can be a helpful tool for both customers and staff. It will act as a visual reminder of the guarantee, prevent staff from making false claims, and allow customers to read the ‘fine print’ if they have detailed questions.
- Have a plan for returns and claims
Create a system to handle any returns or claims you may receive as a result of your guarantee. Ensure your staff is trained to deal with upset customers, and that you gather as much information as possible from unsatisfied clients.
Create a standard claim form.
Have every customer who makes a claim or returns a product fill out a standard form with contact information and details about the purchase experience. This will prevent return fraud and help you collect valuable information about your products or services, and about your guarantee.
- Contact Information
- Reason for claim
Create a claims log.
Use a filing system or log for all claims and returns. Organize claim forms by date so you can review them on a regular basis and identify any patterns or issues that need your attention. You may need to make your guarantee more specific, or address any performance issues with the manufacturer or service provider. Claims should also be noted in each customer’s file.
Go ahead and guarantee the products and services you offer, and show your customers that you stand behind your claims.
Big, bold guarantees generate the best results, but if you’re hesitant, test the waters with something you’re comfortable with. Perhaps start by guaranteeing a new product or service instead of including a guarantee with everything you offer.
Remember to have a system in place to test and measure the conversion rate on your guarantees, as well as a claims system to monitor returns. If a particular product or service is seeing a high number of claims, you may need to modify your guarantee.
Until next time!
P.S. I Guarantee I can show you how to Unlock at least $10k in your business in 45 minutes without spending any money on marketing or advertising. Find out more.
Let’s hear from a small business owner who uses FreshBooks Time Tracking Software. Make sure you read this entire post because it’s a game changer:
No one believed me until I started picking up my kids from school in the middle of a workday. Now they want to know my secrets!
There I was, pulling another all-nighter. I was slammed the entire day, as usual, dealing with clients, putting out fires and losing track of precious time with all the distractions.
This wasn’t what I signed up for when I decided to take the entrepreneurial leap. I’d been fed up with the 9-5 routine, working a thankless job for a lousy boss, and coming home in the evening for a couple hours before turning in for the night and starting all over again the next day.
The thought of being my own boss was so tempting I couldn’t resist. So I put in my notice, said my goodbyes and was on the path to bigger and better things as an entrepreneur.
But 2 years in and those 60-hour weeks had become all too common, and I didn’t have all that much to show for it. Oh sure, the money was good at first but as I got busier, I didn’t have time to prospect for more clients, so my earnings stopped increasing and I started thinking I might have to go get a job.
I had become “chief cook and bottle washer” and the things I was doing all this for, to have more time with my family and more money in my bank accounts, just weren’t happening.
There must be a better way, I thought. There must be something, somewhere that would be a way out so I could start to leverage, to scale and to really make this small business something to be truly proud of.
And then it happened.
It all started when I read about a breakthrough new way to track your time. This was always a challenge for me because I had some serious issues with time management, since there are so many distractions, so much to do and so many time wasting habits (social media anyone?).
Plus I’ve tried time trackers before and they were all duds. There’d be glitches in the software, or complicated directions, or I’d screw something up, it’s almost like just figuring out the time tracker was taking up too much of my time!
But this time I discovered something completely different.
It’s FreshBooks Time Tracking Software, and let me just tell you, this has completely revolutionized my business and my life!
For example, let’s say I’m keeping track of time on a task I’m doing for a client and I have an interruption (and I get those a lot!). All I have to do is click one button in the program and it will pause the timer. And when I’m done dealing with the drama, all I to do is click it again and the timer resumes.
And, since I’m one of those multi-taskers I can even use more than one timer and I can toggle back and forth tracking all my time on all my projects!
One of the best parts of this is that the timer will automatically enter the hours into my timesheet so the dreaded human error element is no longer a thing and invoicing at the end of the month is a breeze.
So by now you’re probably wondering, OK so how did I increase my revenue by 33,468? Easy.
You’ve heard the old saying “time is money” right? Well, here are 3 ways my revenue and profits have increased as a result of using this software:
1. I started saving multiple hours of time in my day, which freed me up to start prospecting for more clients, and with my reduced stress and overwhelm, my sales call results started to skyrocket! Cha-ching!
2. The increased revenue is also allowing me to invest in some advertising that I couldn’t do before which is generating more business. I’m scaling up, creating my empire, and I am NOT looking back.
3. Before FreshBooks Time Tracking Software I didn’t realize how much I was undercharging. Making this change allowed me to increase both the hours per project and the price—finally I’m earning what I’m really worth!
As for the personal side of my life, well let’s just say that things have never been better. I’m able to pick my kids up from school every day now (which was supposed to be one of the original perks of working from home!). They much prefer my face to the bus driver’s.
And with all the activities they’re involved in, I’m now free to take them to and from baseball, band practice, you name it. We’re even planning a vacation that we’ve been dreaming about for years but could never afford until now.
From a business perspective, FreshBooks Time Tracking Software is perfect for entrepreneurs or small biz owners who want to take back control of their time, get more done and increase cash flow.
Tracking billable hours is a breeze with this, and even putting a quote together is easier because you can go into the software to see exactly how long it took you to do the same task in the past. No more guessing games.
I’m planning to hire employees this year and I will know how long a job is supposed to take, feel confident that I’m paying them for hours worked and know they’re being productive. I’ll be able to spot potential danger zones before there’s a big problem. Having this information will also help me prioritize what needs to be done to keep on deadline and within budget.
Oh, and since I also use FreshBooks for my accounting software, it’s really a seamless way to add this on and still enjoy all their great support and customer service, which has always been top notch.
Look, I’m not a time management guru or anything, far from it. But when something works, you stick with it. And this software works for me on many levels.
It has allowed me to find an average of 8.75 more billable hours a week and reduce the hours I spend working, too. No more all-nighters. No more bus rides for the kids. And no more stressing about overcharging or undercharging for my services.
So if you do the math, and you consider how much you bill clients for an hour of your time, how much more do you think you could make every month if you found 8.75 more billable hours every week?
Personally, I charge an average $75 an hour for my services. My extra 8.75 hours saved a week comes to $656.25, which is $2,789.06 every month and $33,468 a year, all because I made a tiny investment in the FreshBooks Time Tracking Software.
This powerful product gets my highest recommendation.
In the last post we talked about how to bring the big-company mindset into your business and your team. This will help you overcome the mental obstacles that will keep you from being successful. Now, that you’ve learned how to overcome that, we’re going to talk about who your fish is. It’s important to know about the fish you are looking for before you put a plan together. We’re also going to take a moment to talk about the potential “red tape” you may encounter along the way.
The most important thing to know about your fish is their purchasing habits and procedures. There are four main things you need to work on in order to be successful:
- Responsibilities: You need to know who has influence over purchasing, who does the actual buying and who can kill a deal if they want.
- Get on Their List: You need to know how to get on their list of people to buy from. Your name needs to not only be on the list, but at the top of it and in as many categories as possible for the more interaction. Ask about a procurement program and what you need to do to go through the application process.
- Lingo: You need to learn the company’s unique language and communications methods. These could include report names, buzzwords and even the nicknames they have for their employees.
- Fiscal Budgets: It’s essential you know the fishes fiscal budget, so you know exactly when they are planning their expenses for the year.
Now that we’ve talked a little about what you need to know about your fish, let’s a quick look at the “red tape”.
Bureaucracy might as well be a four-letter word with the emotions it stirs in all of us. “Red tape” is a necessary evil, but one you can use to learn from. There are two ways to learn from their system:
- Analyze their activity.
- Review their correspondence.
Being an outsider looking in can have its advantages too. If you hate dealing with the “red tape”, imagine how their employees feel dealing with it. If they need to crunch some numbers, offer to do it. If they need more info, make sure you are giving it to them in a user-friendly way.
The things we talked about in this lesson will help you prepare for the big approach. If you need help with any of this, let’s talk!
In a previous post we started our series on catching big clients, or “fish”, that will sustain your business over the long run. Today we’re going to take that a step further by talking about how to understand and think like a big fish company and how that can help you plan your approach and find success.
Before you can start the process of landing big clients, you have to make sure your entire team is onboard with your approach and vision. There are six keys to finding big client success. They are:
- First Impression: You must remember you have one shot to land a big client. If you make a mistake, they aren’t going to consider you again. Never give them a reason to doubt your abilities.
- First Priority: Your fish must always feel like they are your first priority. Returns calls and emails immediately and find solutions to their problems or questions as quickly as possible.
- Flexible: You need to be flexible in your negotiations. If they need a special service or for you to customize a product, say yes for the benefit of the long term. A little hassle now will be a big pay off later.
- Long-term: This goes along with the last one a bit. As you are approaching and negotiating with big fish you need to think about the long term benefits for your business. If you go for a ones-time big score you will lose their interest.
- Have Fun: Work should be fun, even when trying to land big clients. In fact, this should be the most fun. You are sharing your vision with new people and including them in your future success and likewise. People simply work better in a fun, happy environment. Your passion will also be contagious and pull the fish into your vision even more.
- Help Them: If you take just a little bit of time and offer your clients ways to save money or time by introducing them to potential business partners, this will show you really are invested and interested in their business. Strive to find balance between your business needs and your client’s needs.
There are also a few tactics you can use to bring in a big-company vision to the people on your team. You can:
- Post these six keys for all to see.
- Put together a performance based incentive program.
- Conduct frequent team meetings.
- Use a “right now” policy that dictates big fish calls be answered immediately.
- Offer awards/recognition for big-company ideas and executions.
- Put together a training and certification program based on the six keys above.
These 6 keys and tips will help you instill a big-company mindset through your company which will help you be more prepared and more likely to land your big fish. Once your team is thinking this way, you’ll be unstoppable.
If you need help putting together an incentive program or other way to push your team toward the big-company mindset, let’s talk
There are a number of factors to take into consideration when prepping yourself and your company to approach the largest clients you’ll ever work with.
Today we’re going to start with a brief look at the three paths every business faces and show you which one is the path to success. Then we’ll talk about the mindset it takes to attract the big fish.
There are three major paths a business can take:
- Snail Speed
- Shooting Star
- Catch the Big Fish
Most business owners ended up working themselves into the ground without much reward or success. This is what happens when you fool yourself into thinking you will find quick success. You may also find yourself following this path when you are afraid of change.
This describes a business that shoots to the top so fast you are overwhelmed and don’t have the right resources in place to adapt. This can also happen from being overwhelmed by small clients and not taking the time to find large clients, which will sustain your business after the small client sales slow.
Catch the Big Fish
This is the path that allows you to build at a steady pace that you can manage by not allowing your customers to outpace you. You can do this by putting these tips to work:
- Attract, keep and lock in big clients.
- Integrate “big business” culture into your company and employees.
- Acquire the expertise you need to grow.
- Have the courage to make changes as you grow.
Now we are going to transition a bit and talk about the “big fish” mindset. It may sound easy to just find and catch that big fish, but if you are stuck in the small business mindset, you may find it harder than you think.
Think of all the benefits of aiming at bigger clients:
- Highly Profitable
In order to catch the big fish, you need to believe your company can make a difference with theirs. It’s easy to get into the thought that a large company doesn’t need anything from a small business like yours, but this is entirely wrong!
Once you take a look at how big companies operate, it’s important to know which ones are the best fit with your company. One of the best ways to get in the door is by knowing someone on the inside who can put in a good word for you.
If you’re not sure where to start and feel a little intimidated about catching big fish, let’s talk.