Does your guarantee provide value and eliminate risk for the prospect, or does it simply give their money back?
While giving their money back is often seen as an ideal guarantee, the fact is that while it’s the easiest effective guarantee you can make, it’s also the least common denominator.
Does your business reputation depend on least common denominator service? I suspect it doesn’t.
Least common denominator?
A least common denominator is like a best practice.
The term “best practice” implies something only the best companies employ, but the reality is that there’s so much focus on best practices that they’re often the average.
“Average” because these best practices are what most businesses do. The truly best practices of the best companies are often unseen to most other, or they’re simply not recognized as something that provides a substantial competitive edge.
These things don’t have to be expensive or mind-blowing. They simply require seeing your business relationship with the customer from their perspective. One example is being mindful of opportunity cost.
What about opportunity cost?
While a money-back guarantee does eliminate the client’s obvious loss-of-investment risk, it doesn’t take into account their opportunity cost – the cost to them of your inability to deliver.
Protecting the client from lost opportunity isn’t part of most guarantees, but it should be part of yours.
Let’s look at airline flight guarantees to understand why.
If you book a seat on a plane for travel to a critical face-to-face meeting and the plane is late for reasons other than severe weather, the airline may reroute you, book you on a competitor’s flight or worst case, get you a hotel room for the night so they can try to get you to your destination the next day.
What they won’t do is compensate you for missing the meeting, even your late or non-arrival is entirely their fault. How would they calculate what to pay you, assuming they could afford to?
If you miss a meeting due to air travel issues and this ultimately costs you $20 million, do you expect the airline to cough that up because you bought a $400 plane ticket? Only the narcissistic would have such expectations.
All the airlines can really offer is a full refund in the form of a future flight, a flight on their competitor, or to ask you to be patient while they work to eventually get you to your intended destination.
Even if the airlines sold “guaranteed travel” tickets at a much higher price, the logistics of delivering a guaranteed service would likely make it unprofitable for them.
Given the possible reasons that a flight can be late, it’s understandable, so why does the lack of an opportunity cost guarantee come off as weak in your business?
Create a truly meaningful guarantee
Most of you don’t have the logistical issues that airlines have, so you can offer a guarantee that deals with lost opportunity cost without a huge expense or effort. All it takes is some thought, action and follow up.
That’s why not protecting a client’s opportunity is weak.
If you own a local hotel, there will be times where you can’t fulfill a reservation. Plumbing leaks. Power fails. Stuff happens.
If you have an arrangement with nearby competitors, a bed and breakfast and a few airbnb hosts, you can avoid leaving a guest out in the cold. While it might not seem like a big deal to you, these things have a way of happening when the prospective guest is an influencer on Trip Advisor, or worse, a travel writer with two million Facebook likes and a cable TV show.
The same thought can go into guaranteeing carpet cleaning, car rentals or whatever you do. Take away the investment risk like everyone else, then wrap the opportunity loss in bubble wrap.
Go to the bullpen
When a pitcher throws so many pitches that they “lose their stuff”, managers call the bullpen for a pitcher with a fresh arm.
That’s what customers want. They don’t want excuses. They just want whatever you promised. Your job is to figure out how to deliver that even on your worst day, or when your pitcher has lost their stuff – whatever that means in your business.
To a client, an appointment or a reservation is a promise – and often that client has made promises based on the one you made them.
Want to learn more about Mark or ask him to write about a strategic, operations or marketing problem? See Mark’s site, contact him on Twitter, or email him at [email protected].