DW's Blog

Product And Service Guarantees

by DW Green — September 6, 2017

Perspective

There’s no guarantee of keeping a customer for life. Though having an unconditional product and service guarantee can go a long way in keeping your base of loyal primary shoppers. A guarantee is a promise or assurance that a company will stand behind the quality of products it sells or services it performs. Guarantees build trust and loyalty with consumers. In a sense, a guarantee is a company’s commitment to the well being of its customers.

5 Reasons Why A Guarantee Works

First, it pushes the entire company to focus on customers’ definition of good products/service, not an executive’s assumption. Second, it sets clear performance standards, which boost employee’s performance and morale. Third, it generates reliable data (through payouts) when performance is poor. Fourth, it forces an organization to examine its entire service-delivery system for possible failure points. Last, it builds customer loyalty, sales and market share.

What is a good guarantee? It is (1) unconditional, (2) easy to understand and communicate, (3) meaningful, (4) easy and painless to invoke, and (5) easy and quick to collect on.

Cheating. Fear of customers cheating is a big hurdle for some when considering offering guarantees. Sure, there will be cheats—the handful of customers who take advantage of a guarantee to get something for nothing. What they cost the company amounts to very little compared to the benefits derived from a strong guarantee. Too often management worries about the 1% of people who might cheat the company instead of the 99% who don’t.

The cost of providing an unconditional product and service guarantee is far less than the cost of replacing a dissatisfied unhappy customer. Perspective.