Thursday, May 26, 2005

"Increase Your $ales with This, Guaranteed!"

Here's some advice for people running businesses out there.

If you can't stand behind your product 100%. You're probably in the wrong business.

And even if you're in the right business, someone else is stealing market share from you every day with the power of their guarantee. It is a proven fact that businesses that guarantee their products sell more, grow faster, and make more money. Here's why it works.

People are motivated by their feeling of security.

When you remove all risk for the buyer, they feel obligated to buy your product over someone else's because they feel safe.

Not only do they feel obligated to buy your product, but they also feel obligated to tell someone about it. It's an extra bragging right.

Have you ever purchased something you were so excited about and caught yourself saying to someone else after describing what you purchased, "It came with a guarantee (or warranty) too, so if I ever have any problems I can take it back." This added excitement is a *bonus* for buying that particular product, and your friend will want the same guarantee too.

It adds value to your business model.

One problem I find with a lot of business owners who do stand by their work is that they simply don't advertise their guarantee out of fear that they might have to take a loss once in a while if they advertise it. This couldn't be more wrong.

Of course if you offer a guarantee some people will take advantage of it - but if you quadruple your sales will you really care?

The added benefit in advertising, growth by word of mouth, and pure attractiveness of the product itself will increase sales so much that it will far outweigh the losses you'll incur by refunding someone's money or replacing someone's product every once in a while. Here are the statistics:

Only 1-2% of all your customers will ask for their money back or for a return. How do I get this number? Just ask yourself.

How many customers have complained about my product or service lately?

Unless you are truly doing something wrong, or are in the wrong business, I doubt your numbers will far exceed mine.

Lets look at an example:

If you sell a service and someone asks for their money back, you haven't lost out on any physical cash - only your time. You probably did the service wrong in the first place, or not as promised causing the customer to ask for their money back. You have actually gained something by this experience, learning what NOT to do next time. A small price to pay 1 % of the time to quadruple your sales.

If you sell a widget for 20$, which wholesale costs you $10, and you must refund someone's money - you're only out $10. Still a fair price to pay out of every $100 profit, especially if you were only making $25 profit over the same time period before. (That's the 4X sales guarantee working for you there.)

If you sell a widget for 20$, which wholesale costs you $10, and you must replace the product - you're only out $20. (And the customer got the added value benefit worth $40) Again, a small price to pay for the increase in sales you'll receive.

Finally - if you DO offer a guarantee TELL EVERYONE ABOUT IT! This is the only way you will see the benefits on your bottom line. Heck, you could even add it to your business's name, "Jay's Guaranteed Widgets" so its on everything you ever send out with your name on it. Now that's advertising your guarantee.

Add this technique to your business's practices, I guarantee it will increase your sales and profits.


Blogger Rajesh Soni said...

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12:34 AM  

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