Definition: A pledge, usually in writing, given by a company to any customers
that something is of specified quality, content, benefit or that it
will provide satisfaction or will perform or produce in a specified
manner. A guarantee also outlines what will happen should the buyer
not be satisfied with his purchase.
When you're casting about for ways to boost customer service, don't
neglect product or service guarantees. Guarantees are one of the
most powerful marketing statements you can make, especially for new
companies.
While helping to build customer loyalty, guarantees also lead to
excellent feedback. Customers demanding guarantee payouts point
directly to weaknesses in the system. And while you may have to pay
to make things right for disgruntled customers, in return, you'll
be purchasing invaluable information about where things are going
wrong.
Ideally, a good guarantee is unconditional, easy to understand,
meaningful, easy to invoke, and quick to pay off. As an example,
look at the guarantee offered by cataloger Lands' End, which says
its products are "Guaranteed. Period." Additional words in the
guarantee advise buyers that this means they can return anything at
any time for any reason. That information is very comforting to a
customer.
A meaningful guarantee has to really repay a customer for the
trouble your product or service caused. Even a 100-percent refund
may not do that if the cost of the product is small compared to the
inconvenience, for instance, when a leaky ballpoint pen ruins an
expensive suit.
Before you decide whether your guarantee should be unconditional
or specific, money-back or more, ask your customers what's
important to them. Xerox Corp. once considered offering buyers of
its office copiers a 90-day, unconditional, money-back guarantee.
It sounded great until Xerox asked customers what they wanted. Most
corporate purchasing agents said they didn't want the money
back--that would just make them look like they'd made a mistake
buying a Xerox. What they really wanted was a guarantee of a
replacement if any problem cropped up. So Xerox crafted a guarantee
to replace any copier that had a major service problem within three
years of purchase.