Tuesday, February 22, 2005
Extraordinary Guarantees
Extraordinary Guarantees
© 1993 Christopher Hart
Guarantee.
Offer a specific extraordinary guarantee to focus your company.
An extraordinary guarantee is intended to force a company to deliver excellence and to fight to win and retain customer loyalty. It sharply refocuses corporate priorities on those elements that most need fixing.
If an organization has to pay in hard dollars for its mistakes, the cost of poor quality becomes unbearable. Three choices: fix the problems, go out of business, or get rid of the guarantee.
A strong guarantee lowers a customer’s estimation of the risk of making a purchase. If customers can get their money back, then they don’t stand to lose as much if the transaction goes sour. It can help to differentiate a company from its competitors and in the process grab a significant amount of attention.
Guarantee is well suited to companies that have achieved high quality but that have not yet won a reputation for quality in their market.
People who have no problems intend to repurchase 84% of time, people who have a problem and it was resolved satisfactorily will repurchase 92% of time. People who have unresolved problem will only repurchase 46% of time. Thus, a speedy recovery is the best!
Half of all unhappy customers do not complain at all. Getting feedback from customers is the key.
Guarantees can motivate employees to achieve unprecedented levels of performance.
An unconditional guarantee of satisfaction is perhaps the most powerful. The firm unconditionally guarantees customer satisfaction or its fees need not be paid.
A specific guarantee allows company to focus attention on certain aspects of product or service. One way to manage the risk is to require customer to meet certain conditions, another way is to limit the payout for each triggering. The most is a money-back refund.
Some companies operate with an implicit guarantee.
A company can choose to shower a customer with a payout that is far more generous than any the client might have asked for, creating feelings of profound satisfaction.
Xerox approach was to solicit customer input, took into account its ability to produce quality, went beyond industry standards, directly addressed customer concerns, kept guarantee simple and easy to invoke, aligned guarantee with company priorities.
The cornerstone of a correction loop is a flow of error data, in other words, the ability to become aware of customer dissatisfaction, and preferably on as close to a real-time case-by-case basis as possible.
Every morning, management would meet for up to two hours to determine how each and every complaint would be addressed.
If the error-collection and correction loop is tight enough, problems can be ferreted out and corrected before a large number of customers become dissatisfied.
Three elements:
1) Set up process to trigger, pay out and record data on guarantee.
2) Prepare associates for guarantee.
3) Communicate guarantee to customers to maximize its impact.
Time is critical. The idea is to restore the customer’s faith in the company before he or she has a chance to develop an ingrained resentment or to move to a competitor.
A guarantee will not work without associates empowered to make decisions.
Determine how to tell customers for maximum marketing impact.
If you are not pleased with our product, service, or deliverables stated in this agreement during the first three months and we do not resolve any issues within 30 days of being notified, we offer a full money-back refund.
The goal is to communicate this with as much emotion as possible, since buying decisions are considered by many experts to be based largely on feelings rather than practical reasoning.
Some companies might want to print up the guarantee by itself as sticker, or on a wall of the establishment.
Call attention to competitor’s guarantees. Customers might even want to write a guarantee into their bid requirements.
Office of Consumer Affairs said that every dollar spent handling complaints brings in anywhere from 2-3 dollars.
Resources:
Paperback: 184 pages , Publisher: Amacom - 1993, ISBN: 0814450644
Amazon: http://www.amazon.com/exec/obidos/ASIN/0814450644
© 1993 Christopher Hart
Guarantee.
Offer a specific extraordinary guarantee to focus your company.
An extraordinary guarantee is intended to force a company to deliver excellence and to fight to win and retain customer loyalty. It sharply refocuses corporate priorities on those elements that most need fixing.
If an organization has to pay in hard dollars for its mistakes, the cost of poor quality becomes unbearable. Three choices: fix the problems, go out of business, or get rid of the guarantee.
A strong guarantee lowers a customer’s estimation of the risk of making a purchase. If customers can get their money back, then they don’t stand to lose as much if the transaction goes sour. It can help to differentiate a company from its competitors and in the process grab a significant amount of attention.
Guarantee is well suited to companies that have achieved high quality but that have not yet won a reputation for quality in their market.
People who have no problems intend to repurchase 84% of time, people who have a problem and it was resolved satisfactorily will repurchase 92% of time. People who have unresolved problem will only repurchase 46% of time. Thus, a speedy recovery is the best!
Half of all unhappy customers do not complain at all. Getting feedback from customers is the key.
Guarantees can motivate employees to achieve unprecedented levels of performance.
An unconditional guarantee of satisfaction is perhaps the most powerful. The firm unconditionally guarantees customer satisfaction or its fees need not be paid.
A specific guarantee allows company to focus attention on certain aspects of product or service. One way to manage the risk is to require customer to meet certain conditions, another way is to limit the payout for each triggering. The most is a money-back refund.
Some companies operate with an implicit guarantee.
A company can choose to shower a customer with a payout that is far more generous than any the client might have asked for, creating feelings of profound satisfaction.
Xerox approach was to solicit customer input, took into account its ability to produce quality, went beyond industry standards, directly addressed customer concerns, kept guarantee simple and easy to invoke, aligned guarantee with company priorities.
The cornerstone of a correction loop is a flow of error data, in other words, the ability to become aware of customer dissatisfaction, and preferably on as close to a real-time case-by-case basis as possible.
Every morning, management would meet for up to two hours to determine how each and every complaint would be addressed.
If the error-collection and correction loop is tight enough, problems can be ferreted out and corrected before a large number of customers become dissatisfied.
Three elements:
1) Set up process to trigger, pay out and record data on guarantee.
2) Prepare associates for guarantee.
3) Communicate guarantee to customers to maximize its impact.
Time is critical. The idea is to restore the customer’s faith in the company before he or she has a chance to develop an ingrained resentment or to move to a competitor.
A guarantee will not work without associates empowered to make decisions.
Determine how to tell customers for maximum marketing impact.
If you are not pleased with our product, service, or deliverables stated in this agreement during the first three months and we do not resolve any issues within 30 days of being notified, we offer a full money-back refund.
The goal is to communicate this with as much emotion as possible, since buying decisions are considered by many experts to be based largely on feelings rather than practical reasoning.
Some companies might want to print up the guarantee by itself as sticker, or on a wall of the establishment.
Call attention to competitor’s guarantees. Customers might even want to write a guarantee into their bid requirements.
Office of Consumer Affairs said that every dollar spent handling complaints brings in anywhere from 2-3 dollars.
Resources:
Paperback: 184 pages , Publisher: Amacom - 1993, ISBN: 0814450644
Amazon: http://www.amazon.com/exec/obidos/ASIN/0814450644
