Product guarantees can guarantee increased sales, but like any double-edged sword, these sales might come back to bite you. If you learn how to use this marketing tactic correctly, you can ensure your growing business will enjoy an improved cash flow without slowing down operations whenever a quality issue appears.
Customers often consider similar products or services that have equivalent prices, so you will need to stand out from the crowd by convincing customers they will be better satisfied with the product or service you offer. With everything else being equal, the product that has a guarantee of being effective and reliable will have more sales than a product whose marketing has no mention of any confidence in its operation.
Customer referrals are a similar marketing tactic to build confidence in your product, but a guarantee adds a solid foundation of trust in your business. Guarantees promise to put your customer’s money to good use, no matter what.
Most customers will be glad to see any of these guarantees backing up their decision to use your product, but you will need to tailor your guarantees to what makes the most sense for your business. If you manufacture or produce your own products or services, then all options are on the table. But if you are not the original manufacturer, you will need to alter your approach to guarantees to avoid extra expenses when it comes time to make good on your promise.
If you do not manufacture the product yourself, then chances are you also will not be able to repair defective products yourself. In this case, you might need to offer a money-back guarantee. Just recognize this could be a money-losing proposition, as some customers could essentially “rent” your product for a single use, then demand a refund. Another option is to promote the original manufacturer’s warranties, and be ready to receive defective products from customers, which you then ship off to the manufacturer for their replacement or repairs.
If you do manufacture the product yourself, consider providing repairs on defective products instead of giving money-back offers. This way, you avoid situations where you could lose your original sales revenues to a refund.
Federal and state laws often require product guarantees, but many customers do not know about these laws, so your business competitors might stay quiet about their return policies, and leave these details to the fine print section. By advertising the same guarantee you are required by law to provide, you could be helping your product stand out of the crowd.
If you are an online retailer, federal law requires a 30-day money-back guarantee. Online customers do not get to handle the actual product they are buying, so they require this protection. Since this guarantee is already in place, why not market it out loud to increase sales? If your competitors already do this, why not make it a 90-day guarantee? Chances are your refund rate won’t rise, but your sales rate will.
State laws usually also have implied guarantees that are enforced by law, but there are ways a store can disclaim this implied warranty. If your competitors are removing customer protections in their fine-print disclaimers, they are exposing a weak point in confidence that your marketing operations can call out. Typical state laws require a 4-year warranty; do your competitors live up to this? If not, let their customers know it!
Because of the legalities involved with offering product guarantees, you will need to ensure your business can implement a guarantee that increases profit even in the face of unexpected product quality issues. Any mention of a guarantee made by your business in print ads, online, or over-the-airwaves can be used by customers against you. So your warranty policy must be consistent, realistic, and aligned with your business’ capabilities.
By hiring an advisor to help you craft the perfect marketing guarantee for your products, you can make sure this double-edged sword cuts down any competitor’s offers while avoiding any accidental loss of revenue.
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