What is a guarantee?
In the field of customer service, a guarantee is a commitment a company makes to its customers about the quality or benefits they can expect as a result of purchasing one of its products or services. The guarantee should also include a conditional clause explaining what steps the company will take if the pledge is not met.
Companies and small business owners use these pledges to foster trust in their brand name. The goal is that a strong quality guarantee will convert potential shoppers into buyers. When used properly, it can also transform a new customer into a repeat one - for life.
This statement is also commonly known as a customer guarantee, service pledge, or quality guarantee.
Example of a customer guarantee
The footwear company Chaco is direct in their pledge to customers, posted on their website:
“We stand behind our products. If a product fails because of a defect in materials or the quality of workmanship, we will repair or replace it free of charge.”
The page then continues on to detail what cases are covered by this promise or not.
Its statement is succinct, confident, and precise, three key criteria of an excellent customer guarantee.
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Pros and cons of a customer guarantee
Some advantages to implementing a customer quality guarantee when starting your business include:
Fostering brand loyalty: Delight your customers by delivering stellar service and showing that you’re true to the word of your pledge. Not only are they likely to become a repeat client, they may even take to social media to share how happy they are with your response.
Boost sales: A quality guarantee (e.g. the ever-popular “100% satisfaction guaranteed”) shows that you have faith in your own products and services, helping potential buyers feel more secure in their decision to buy.
Collect feedback: Generally users will follow up on a pledge only when they’re frustrated with the quality of a product or feel their expectations for its value are unmet. Understanding what went wrong can help you troubleshoot and avoid similar situations in the future.
There can also be disadvantages to instituting a customer quality guarantee:
Cash flow impact: It can be stabilizing to your business’ cash flow if you have to suddenly refund an expensive item.
Legal repercussions: In the United States, common language used in customer guarantees, such as “Satisfaction Guarantee,” is regulated by the Federal Trade Commission. Make sure to clearly outline the conditions of what you can be held responsible for under the terms of your pledge.
Exploitative consumers: Ideally, quality guarantees are only ever used by customers who genuinely feel they have been short changed by a product or service. Unfortunately, there are occasionally those who take advantage of a generous policy. You can experiment with different tactics (e.g. a short interview with the customer, the wording of your guarantee, creating a financial buffer for these cases, etc.) to minimize the impact.
It’s also worth noting that customer guarantees have become so commonplace, they can sometimes fade into the background for browsing customers. This raises the stakes for finding a unique offer or messaging for your guarantee.
Common types of customer guarantees
Here are four types of quality satisfaction guarantees that you are likely to see:
Lifetime guarantee (also known as a forever guarantee)
Free trial guarantee (also known as a risk-free or a ‘try before you buy’ guarantee)
Lowest price guarantee
100% satisfaction guarantee (also known as a 100% happiness guarantee)