🛡️ Contentious advice about how to use guarantees

This might be contentious, but I truly believe this is the best way of using guarantees.

How can you offer a guarantee when you cannot 100% control if a client gets the results or not? What do you do if you know 90% + people will get the result you guarantee, but 10% might not for various reasons?

Below are two clips from a more consulting-style session I had with a client recently where we discussed how to use guarantees in his business. A guarantee probably isn’t what you think it is, and most people use it incorrectly in their businesses.

My client, John, was worried about offering a guarantee as he wasn’t fully in control of client results. John helps writers to finish their book, so while he can guide them and offer a lot of help, ultimately it is the writer who needs to write. So, what do we do about a guarantee in this kind of business?

Long story short: Guarantees are promises, yes, but they are primarily a marketing tool. You should offer the best guarantee possible.

Sometimes great guarantees mean people take advantage, but rarely. The benefit of more sales normally outweighs the cost.

Example:

• You don’t have a guarantee and you average 100 sales per month, with a refund rate of 5% (5 refunds per month), making you “net sales” of 95.

  
  

• When you offer a great guarantee, you can often see sales improve 2-4x. However, lets assume a modest 30% uptick. So, now you make 130 sales per month thanks to your new shiny guarantee.

  
  

• However, some people don’t quite get the result for various reasons and some other people take advantage of your guarantee so you refund rate also doubles to 10%.

  
  

• You now make 130 sales, but as your refund percentage grew you now refund 13 people monthly. Your net sales are now 117 (130 sales minus 13 refunds). You just made 22 more net sales per month, it was 95 without the guarantee and now it is 117.

  
  

• Even though refunds increased, you still made more money and have more happy customers because more people were confident enough to buy from you because of your great guarantee.

  
  

While you should only guarantee results you truly believe you can get people - and we need to manage client relations so even refunded people leave happy - we all know that life happens and sometimes things get in the way. Don’t let that stop you from offering a great guarantee. You can literally calculate how much it benefits your business, and how many more people you will be able to help.

Ultimately, this all ties into working with good clients. You should only work with people you truly believe you can get the results for. And you should only work with reasonable people who understand that sometimes external forces cause unforeseen issues. Equally, you should be reasonable, and do what you can to keep the customer happy and deliver on your promises. A good guarantee helps everybody win.

Shorter clip (2 mins):

Longer, more in-depth, clip and explanation (10 mins):

A vote of confidence on how useful the 10 minute video is, I sent it to another client, Anton, as we were also discussing guarantees at the time. This clip changed his perspective and has subsequently helped him sign more, and bigger, clients!

I shared this in my Work Smart Wednesday newsletter. Want the full set of related insights? You can read them here: https://worksmartwednesday.substack.com/p/work-smart-wednesday-july-3-2024

👋 Want to work together?

When you’re ready, here are 2 ways I can help you:

🔍 Clarity Call - We will discuss your situation and create a step-by-step action plan together so you know exactly what you need to do next for maximum impact

🧩 Are we a good fit together? - See whether you and I are a good fit together by answering this short quiz. You will immediately see whether or not we are a good fit, and receive a personalised answer for what the next best step will be for you based on your answers.

💡 Want more from me? Find more on my LinkedIn profile.

🎯If you found this useful, don’t stop here. Sign up for Work Smart Wednesday and get smarter work tips every week.