Everyone is aware of guarantees but it’s surprising how few businesses use one. But that’s great news, as it can give you a substantial competitive advantage, leading to increased sales and profits…
So why do they work so well?
The benefit of your product or service is gained after the sale is made. Sometimes this can be weeks, months or even years after the initial transaction. This in itself places an enormous risk on the shoulders of would-be clients or customers. It’s this risk that often prevents them from buying.
However, if you lower or eliminate the risk, building trust, then naturally people will be more inclined to buy from you.
That’s the secret of creating a powerful guarantee – or risk reversal.
Your risk reversal is simply a method to take away some of the key ‘barriers’ that are stopping the prospect from progressing with the sale.
As soon as you add a risk reversal or guarantee you automatically differentiate your business from your competition. As explained earlier, very few of your competitors will have one in place.
What’s more, a risk reversal adds perceived value to your offering. Prospects will automatically assume your product or service must live up to expectations – why else would you be confident enough to provide a guarantee?
The result is an increase in leads and a far higher conversion rate.
Creating An Effective Risk Reversal
The purpose of the risk reversal is to guarantee the result or main benefit of your offering, and add a ‘penalty’ should your service or product fail.
Without adding a real penalty to your business for failing to deliver, customers will assume they are just meaningless words. Obviously, you must be prepared to pay out when required.
I saw the following risk reversal a few years ago from a pest control company in the United States. I think it’s one of the best I’ve ever seen. Their guarantee is aimed at hotels and restaurants:
“You don’t owe one penny until all the pests on your premises have been eradicated…if you are ever dissatisfied with our services, you will receive a refund for up to 12 months of the company’s services…plus fees for another exterminator of your choice for the next year.
If a guest spots a pest on your premises, we will pay for the guest’s meal or room, send a letter of apology, and pay for a future meal or stay…and if your facility is closed down due to the presence of roaches or rodents, we will pay any fines, as well as all lost profits, plus $5,000.”
This pest control company was able to charge 10x the rate of their competitors and grew rapidly. Although I don’t know for certain, it’s easy to assume several things about the company from this guarantee. They:
- Are very, very good at pest control.
- Understand the concerns of their clients with regards to hygiene.
- Are probably providing similar services to their competitors. However, they understand risk reversal and their profits will reflect this!
You may be worried about paying out large sums to customers if you don’t live up to your guarantee. But if you know you can deliver on your promises, then a guarantee costs you nothing.
It’ll be very rare that you have to pay out (if at all). But in the process, you will gain many extra customers, at a price premium, which more than offsets any risk. There aren’t many marketing methods that can deliver that kind of return.
Isn’t it time you started to use a risk reversal or guarantee to grow your business?
If you’re frustrated that you’re missing your growth targets, or disappointed with the low volume of leads into your business, now could be a great time to contact Kevin Robinson from Chrysalis Partners to discuss your challenges and options for business growth support. Call today on 01926 711911 or visit www.chrysalismidlands.co.uk for more information