B2B Sales, Lead Generation and Marketing Blog

Pros and Cons of Offering Guarantees to Sales Prospects and Customers

Posted by Vendere Team on Wed, May 1, 2013 @ 07:05 AM

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Across the board, research shows that offering guarantees is a great way to increase sales and encourage brand loyalty. Sales prospects and customers like guarantees because they instill trust in a company and its products and solutions. However, there are downsides to offering certain types of guarantees.

Below are three examples of guarantees that can be profitable, but that also have the potential to create more sales barriers than opportunities.

Value or Service Guarantees

A prominent law firm with five US locations offers its clients a value guarantee, which could also be called a service guarantee. The guarantee sounds great. Basically, it tells customers that if they are unsatisfied with the firm’s services in any way—no problem; all they have to do is let the firm know and the firm will work with them to come up with a fair price for services rendered.

This type of guarantee can help instill trust, give customers one less reason to be too intimidated to reach out, and make companies seem more human, but if you think about it, it could also be problematic. Why? It requires that the client express their dissatisfaction directly to the company and then haggle with the company, which is something that most people aren’t comfortable doing.

In addition, the guarantee implies that pricing might not always be fair and that services might not always be up to par.

On-Time Delivery

Guaranteeing that you’ll deliver products on time can be extremely an effective marketing tactic, especially if you’re working within an industry or market that delivers time-sensitive goods. It can also present a number of problems if you don’t offer appropriate, cost-effective, and marketing-savvy compensation for items that aren’t delivered on time. An on-time-or-it’s-free policy may work for pizza deliverers, but it doesn’t work well for most other retailers or for most providers of non-perishable goods.

For most companies, offering an on-time delivery guarantee is only worthwhile and profitable when the compensation for items that aren’t delivered on time makes customers happy and promotes more business. Profitable compensation may come in the form of a voucher or free promotional product that is designed to inspire repeat purchases.

Price Matching

In a 2009 company blog post, Linda Bustos, director of ecommerce research at Elastic Path, explained that one of the major pros of price matching is that it proves to the customer that you’re not price gouging, which, of course, instills trust. She also explained that there are a high number of cons involved in price matching. Price matching can result in an interruption in the selling process that causes you to lose the customer. You can also lose customers by encouraging them to shop around or by putting the idea in their heads that they’d do just as well to buy from one of your competitors if the final price is going to be the same.

While offering certain guarantees can present challenges, you shouldn’t be afraid to offer a strong guarantee. As long as you deliver on it consistently and smartly, a strong guarantee can benefit your company in a number of ways.

As Tom Borg, a sales and customer service expert and professional speaker, recently stated in a Corp! Magazine article, “Having a strong guarantee will hold everyone in your company accountable, and motivate you and your employees to make sure that you deliver what you promise. It most likely will differentiate you from your competitors and add profits to your bottom line.”

Topics: lead generation, sales and marketing alignment

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