The Business of Authority
How To Design Guarantees For Your Work + Products
Mon Jun 05 2023Description
This episode explores the power of guarantees in increasing buyer confidence and reducing perceived risk. It discusses different types of guarantees that can be offered, such as fixed prices and no jargon guarantees. The importance of addressing client fears and dislikes is emphasized, along with the benefits of offering refunds and remedies. The chapter also delves into the role of guarantees in client relationships and the value of bug-free guarantees in software development. Additionally, it covers strategies for addressing pricing concerns and meeting client needs. Overall, the episode highlights how guarantees can empower consultants and build trust with clients.
Insights
Guarantees decrease perceived risk
By offering guarantees, consultants can reduce the perception of risk in buyers' minds and increase the likelihood of a purchase.
Explicit guarantees provide transparency
Making explicit guarantees upfront de-risks the client's purchase decision and fosters transparency in the client relationship.
Different types of guarantees for different needs
Various types of guarantees can be applied depending on the nature of the product or service offered, such as unconditional money-back guarantees for info products and time-bound guarantees for higher-priced products or courses.
Addressing client fears and dislikes
Identifying client fears and dislikes that are under your control and guaranteeing they won't happen can help alleviate concerns and build trust.
Refunds empower both providers and clients
Providing a refund option empowers both the provider and the client, leading to better customer stories and reducing negative word-of-mouth.
Bug-free guarantees demonstrate commitment to quality
Offering bug-free guarantees after launch reassures clients about the quality of work and demonstrates a commitment to fixing any issues that arise.
Addressing pricing concerns
Strategies such as emphasizing the financial incentive to do it right the first time and negotiating payment terms can help address client concerns about pricing.
Taking on risk differentiates businesses
By offering guarantees and taking on some of the risk associated with a project, businesses can differentiate themselves from competitors and charge higher fees for their expertise.
Understanding client concerns builds trust
Acknowledging and understanding a client's concerns is crucial in building trust and making them feel more comfortable throughout the process.
Guarantees empower consultants and build trust
Creating guarantees in client relationships can be empowering for consultants and help define working relationships based on trust and satisfaction.
Chapters
- The Power of Guarantees
- Different Types of Guarantees
- Guarantees in Client Relationships
- Addressing Pricing Concerns and Client Needs
The Power of Guarantees
00:00 - 07:16
- Guarantees decrease the perception of risk in the buyer's mind and increase the likelihood of a purchase.
- Consultants may hesitate to offer guarantees on services, but it can differentiate them from competitors.
- Offering fixed prices is a form of guarantee that decreases fear and increases trust.
- Decreasing the perception of risk revolves around mitigating the likelihood and impact of a loss.
- Guarantees are possible even when the buyer needs to participate in achieving the desired outcome.
- It is difficult to guarantee outcomes that depend on factors outside of your control.
- Guaranteeing unguarantable outcomes may be illegal or unethical.
- Some businesses use guarantees as a marketing strategy, knowing that not everyone will ask for refunds.
Different Types of Guarantees
06:48 - 20:05
- Charging a high price for a service and offering a money-back guarantee relies on the assumption that not everyone will ask for a refund, allowing the business to still make more money.
- Some people view this approach as sleazy and pushy.
- Instead of waiting for an uncomfortable situation to arise, it's better to make explicit guarantees upfront to de-risk the client's purchase decision.
- Explicit guarantees also provide transparency in the client relationship and give clients permission to address any mild dissatisfaction they may have.
- Guarantees can be unrelated to the product itself, focusing on aspects of the experience or fears that clients may have.
- For example, in software development, guarantees could include speed of delivery, no ghosting guarantee, or no jargon guarantee for non-technical clients.
- Offering a no jargon guarantee can be beneficial when working with non-technical clients.
- Clients appreciate not being talked down to or having to ask for explanations.
- Identify client fears and dislikes that are under your control and guarantee they won't happen.
- Listen carefully to clients during sales conversations to understand their worries.
- Clients may express concerns indirectly, so pay attention to what they say and don't say.
- Address the fear of self-doubt by offering a red alert guarantee that keeps clients on track.
- Different types of guarantees can be applied depending on the nature of the product or service offered.
- For info products, an unconditional 100% money back guarantee is recommended.
- Time-bound guarantees can be used for higher-priced products or courses.
- Hybrid guarantees can be offered for workshops that are dripped out over time.
- Consider offering a retake option for cohort-based courses if participants need to drop out.
Guarantees in Client Relationships
13:34 - 38:58
- Offering free retakes for digital remote training courses is a good option
- For services like one-on-one coaching calls, offering a money-back guarantee at the end of the call can make clients feel more satisfied
- Asking clients if they feel the service was worth the money at the end of a call is important to gauge their satisfaction
- Providing a refund option empowers both the provider and the client
- Having a positive refund experience leads to better customer stories and reduces negative word-of-mouth
- Consider offering a free call in three months if the customer feels they didn't get something out of the service
- For long-term engagements, offer a professionalism guarantee in the first 30 days
- The value of the engagement is highest at the beginning and decreases over time
- If a project fails or doesn't meet expectations, refunds may not be offered depending on the circumstances
- Having an easy escape hatch for both parties can prevent dissatisfaction and provide an easier way out
- Phrasing the guarantee as being under your control makes it easier to give money back
- Creating guarantees in client relationships can be empowering and help define working relationships.
- Offering a refund or remedy if the standards described in the guarantee are not met can ensure client satisfaction.
- In situations where a project is going sideways and it's clear that the client is not a good fit, it may be beneficial to give back a portion of the payment and walk away from the project.
- Giving back money in these situations can provide instant relief and remove pressure from shoulders.
- Refunding money to unsatisfied clients may seem counterintuitive, but it allows for moving on to ideal clients who appreciate and value your work.
- Long-term software build projects with high-value investments cannot afford full refunds at the end if the client is unsatisfied.
- Offering a bug-free guarantee for a certain period of time after launch can address client concerns about quality and demonstrate commitment to fixing any issues that arise.
- A bug-free guarantee can be used as a top-tier option in proposals, providing added value for higher-priced packages.
- The bug-free guarantee also reassures clients that corners will not be cut during development, as there is an incentive to deliver quality work to avoid additional maintenance costs.
Addressing Pricing Concerns and Client Needs
19:35 - 49:32
- Consider addressing client concerns about cutting corners by emphasizing the financial incentive to do it right the first time
- Performance billing can be used as a way to address pushback on fees, allowing clients to pay more if they are satisfied with the outcome
- Discounting fees should generally be avoided, but there may be scenarios where some flexibility is warranted
- Payment terms can be negotiated to provide upside potential for the consultant while still ensuring client satisfaction
- Timing of payments can also be used as a way to address pricing concerns
- Profit margins and reputation play a role in determining pricing strategies for consultants
- Guarantees may not always involve money; clients often want the desired outcome or performance
- Customers who have invested in a product or service are unlikely to want their money back if there are issues. They want the product to work and address their specific needs.
- When undertaking big change projects, such as mergers and acquisitions, fear of failure is a common concern for those in charge of human resources.
- Offering guarantees can help alleviate fears by providing confidence that mistakes will be addressed and support will be provided throughout the process.
- By taking on some of the risk associated with a project, businesses can differentiate themselves from competitors who refuse to take any risk.
- Taking on risk allows businesses to charge higher fees for their expertise and ability to mitigate potential problems.
- Understanding and acknowledging a client's concerns is crucial in building trust and making them feel more comfortable throughout the process.