Service Guarantees As A Strategic Weapon.
Service guarantees are a strategic weapon in the continuing battle to differentiate and gain a competitive advantage.
This is especially important for online businesses because customers often feel more assured when they can walk into “brick and mortar” stores and offices. Even if the company is selling an intangible service, the company somehow seems more “stable” because the customer can physically see and feel the business surroundings.
By offering a service guarantee, you can increase customer satisfaction and retention by reducing consumer risk, improve service quality and establish service standards for your business. An effective service guarantee can have a substantial impact on your bottom-line.
But which is more effective — an unconditional or specific guarantee? And what is the difference between the two?
A major challenge is to design a guarantee that is appropriate for your business situation. Guarantees specify what the consumer can expect (the promise) and what the company will do if it fails to deliver (the payout).
The pure unconditional guarantee does not specify either the coverage or the payout (e.g. Satisfaction guaranteed. Period.) The most common unconditional guarantee does not specify the coverage but does specify the payout (e.g. Satisfaction guaranteed or your money back.)
The pure specific guarantee details both the coverage and the payout (e.g. Delivery by 10:00 a.m. or your money back.)
Finally, a specific guarantee might contain a detailed coverage and an unconditional payout (e.g. Delivery in 30 minutes. Period.) although it is seldom used in practice.
The guarantee selected will have an impact on the costs and benefits for your firm.
What marketing researchers have discovered is that when it comes time to select a firm, consumers prefer the unconditional guarantee. To them it signals that the firm offers higher quality overall.
When it comes time to actually use the guarantee, consumers prefer a specific guarantee for both its clarity and ease of use.
The researchers concluded that if a firm were in the process of choosing which type of guarantee to use, the creation of an unconditional guarantee with a specific payout would have the greatest positive impact on the business.
Why Are Customer Testimonials So Effective?
Some marketing pitches are so over-loaded with testimonials from “satisfied customers,” one wonders if the business is really that good, or if the owner has a long list of friends and family members who are willing to say nice things about the company.
In fact, most testimonials do create a favorable impression — that’s why we use them! The question is: why are they so effective? A recent article in Scientific American gives us an answer.
“How Anecdotal Evidence Can Undermine Scientific Results” explains why clients sometimes reject the “facts” you might mention during the course of a consultation and instead adhere to unscientific, subjective stories they have heard or experienced, such as customer testimonials. According to the authors, this tendency to reject factual evidence in favor of personal anecdotes has its roots in our primitive survival instincts:
“We have evolved brains that pay attention to anecdotes because false positives (believing there is a connection between A and B when there is not) are usually harmless, whereas false negatives (believing there is no connection between A and B when there is) may take you out of the gene pool. Our brains are belief engines that employ association learning to seek and find patterns. Superstition and belief in magic are millions of years old, whereas science, with its methods of controlling for intervening variables to circumvent false positives, is only a few hundred years old.”
In other words, this behavior reflects a primitive survival instinct. That’s not likely to change anytime soon.
There are several lessons here. If you are a consultant or coach trying to help a client “get real” about their business or personal circumstances, don’t take it personally if the client rejects your factual “evidence.” When they balk at letting go of attitudes or beliefs based on personal experiences or stories, they are just being insanely normal!
Second, you can alert your client to this very human behavior. Explain that your information might seem to contradict what the client has come to believe anecdotally. Having this explanation upfront might at least open up the client to considering information that contradicts what the client already “knows” to be true.
The third lesson actually uses this primitive instinct in a positive way.
There’s a reason why so many effective marketing programs rely on testimonials to “make a case” for a product or service: they engage our basic human instincts. We tend to pay attention and give high value to stories from other humans. That’s just the way most of us are wired.
Even though our rational, logical selves tells us that four or five positive testimonials from satisfied customers are not scientific proof that the service is good for us — perhaps there are, unknown to us, two hundred dissatisfied customers! — our primitive emotional side tends to place greater weight on the positive, anecdotal evidence we read in an ad or on a web site.
Although this Scientific American story seems to contradict other studies about the way humans process information — for example, high-risk, high-involvement decisions often drive consumers to seek factual information before they make a purchase — it explains a human characteristic that most of us have experienced as consultants (at least, anecdotally speaking!).
Bottom line: you can use this lesson to help clients come to terms with facts they might otherwise be reluctant to accept. As for all those testimonials on your web site or blog saying what a great business you have — keep them! Now you know the real reason they are so effective.
Great Reasons To Market With Newsletters.
With unlimited advertising options and very limited marketing budgets, small businesses have some tough choices to make. Here are ten great reasons why small businesses should consider using newsletters and email newsletters.
1. Increase sales from your current clients. 80 percent of your sales come from the top 20 percent of your clients. A marketing newsletter is an effective way to reach top buyers in a non-intrusive style and inform all clients of any new services your offer.
2. Keep current business coming in. This is the “bathtub” theory. While expanding your customer base — filling the tub with new clients — you want to make sure that existing clients don’t escape down the drain. A newsletter shows people that you value their business.
3. Add value to your services. In a rapidly changing world, newsletters are a vital part of keeping people up to speed. Make getting the newsletter a prime benefit of using your services from you. Give clients “subscriptions.” Place a cover price on the newsletter but send it free to top customers.
4. Lock down your niche. Most businesses survive because they offer specialized products and services not provided elsewhere. A newsletter with specialized content locks in your expertise.
5. Educate prospects. Newsletters work well when people must be educated about your products or services before they will buy from you.
6. Establish expertise and credibility. New companies find newsletters a great way to overcome first-time buyer resistance.
7. Save selling time. People who respond to your newsletter are better informed because they already know more about what you offer than someone coming in from other advertising.
8. Spur word-of-mouth referrals. Newsletters have pass-along value. A good newsletter will be shared with an average of three other people.
9. Network though news. Keep in touch with everyone who can help your business — your local government, the press, recruits, and peers within a related industry.
10. Draw readers to your web site. A helpful newsletter can do double-duty as content for a web site. Or, the newsletter can advertise additional information available only on your web site, pulling in online traffic.
Let the world know who you are!
