Offering a guarantee is one of the most powerful ways to increase conversion rates and build trust with prospects. However, they must be crafted thoughtfully to be effective.
In this episode of Influence by Design, Samantha and Tim break down the art and science behind guarantees and risk reversals that drive sales.
Learn the difference between guarantees and risk reversals and how to leverage them in your business. Discover common mistakes that erode trust and gain actionable strategies to create a guarantee policy that alleviates buyer concerns and conveys confidence in your offer.
Whether you sell high-ticket services or physical products, this episode will equip you to use guarantees to profitably scale your business.
IN THIS EPISODE YOU’LL DISCOVER:
- Understand the difference between guarantees and risk reversals (01:20)
- Common industry examples of product warranties (02:25)
- Why service businesses shy away from offering guarantees (10:00)
- The impact of guarantees on conversion rates (13:04)
- The common mistake that can ruin a guarantee’s effectiveness (15:00)
- Options beyond money-back guarantees (19:56)
- Budgeting for possible claims (21:49)
- Honoring guarantees with minimal friction (23:02)
QUOTES
- “You need really clear terms and conditions for your guarantees, because otherwise there is a likelihood that people could abuse them.” -Samantha Riley
- “If you offer a guarantee, and then make it next to impossible for someone to claim it, you’ve actually got more chance of leaving a sour taste in someone’s mouth than if you didn’t offer the guarantee in the first place.” -Samantha Riley
- “The bigger the ticket, the better off you are with a guarantee.” – Tim Hyde
- “You’ve got to make the terms realistic, and you’ve got to honor them as well.” – Tim Hyde
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WHERE TO FIND TIM HYDE
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CONNECT WITH SAMANTHA RILEY
- Facebook: Samantha Riley
- Instagram: @thesamriley
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- Twitter: @thesamriley
TRANSCRIPTION (AI Generated)
Samantha Riley Snippet (00:00):
There is a certain amount that the client needs to actually do. So if we, as coaches say, hey, look, if you don’t get results, you’ll get your money back for the client, they’ll be like, great, I don’t need to do anything, and I just get my money back.
And I’ve collected all the IP along the way. That is the fear. And that is a reality. Because in coaching, we need our clients to take responsibility and to take action.
Tim Hyde Snippet (00:30):
That’s the big fear as business owners we have about offering guarantee that if I offer one, everyone will claim it. And I’ll do all this work for nothing. And we’re in a worse position than when I started. And that’s typically not the case.
But I think we got to remember that, you know, guarantees are probably most important at the point of conversion.
Samantha Riley Intro (00:49):
Welcome to the Influence By Design Podcast. I’m Samantha Riley, authority positioning strategist for coaches and experts. If you’re ready to build a business that gives you more than just a caffeine addiction, and you dream of making more money, having more time, and having the freedom to be living your best life, then you’re in the right place, it’s time to level up.
Welcome to today’s episode of Influence by Design. I’m your Thursday co host Samantha, Riley and joined as always by Tim Hyde. How are you, Tim?
Tim Hyde (01:20):
Good, almost as always, Sam, because I’ve missed the last couple of weeks.
Samantha Riley (01:26):
We’ve had a couple of weeks off both of us. We have
Tim Hyde (01:28):
you’ve been you’ve been gallivanting around the ocean. I have enjoying your time off, and congratulations on some recent changes in your business that allowed it all to run almost seamlessly.
Samantha Riley (01:44):
Absolutely. Lovely to be cruising around the South Pacific with a cocktail in hand, and knowing that my coaches completely had everything handled, and they handled it beautifully. And it was lovely.
Tim Hyde (02:01):
Yeah, look, I think we again, we lose sight. We you and I talk about this a lot, that the goal of your business is not to own a job. The goal is our businesses to have the lifestyle that your business facilitates.
And if you can’t step away from it, as you’ve just done, I did a few weeks back to the boys trip to France for the Rugby World Cup. What’s the point in having it?
Samantha Riley (02:25):
Exactly it but I just want to say here that you and I did not wind up in this position on day one of our business Oh, yeah, it wasn’t. It wasn’t by accident. No, it wasn’t by accident. It’s very calculated. It’s very strategic.
And it’s very much about always knowing what the next step is. And it’s something that my clients say something actually that even my coaches are a big part of their training that they feed back to me is that they always love how I’m like, Yeah, okay, that’s great. But what’s just the next step, we don’t need the whole big picture, we definitely need to know where we’re going.
But things in business never go as we anticipate. So it is just about knowing the next step, because the next step after that might alter a little bit to what you first thought. So I think that that we do need to acknowledge that you need to have a plan. And then you just need to chip away at that little plan so that you do get to where you want to go.
Tim Hyde (03:28):
Yeah, I love that. And congratulations on being able to take holiday.
Samantha Riley (03:32):
Thank you and likewise. But today we’re going to talk about guarantees and risk reversals, you and I had a great conversation. I honestly at some point, I thought I should have just press record, and we already would have had three episodes.
Tim Hyde (03:47):
You guys know this, but we like every single week we we go you know what we should have just recorded all the outtakes of that episode.
Samantha Riley (03:56):
Where you have some great conversations, and this was another one of those you brought this topic to the table. And I love it because it’s a conversation that a lot of people are afraid to have.
And we’re going to tap into a little bit more about that later as to why they’re afraid to talk about this. But I would love you to share what are the difference between guarantees and risk reversals? Like how do they differ and, and how would you define what they are?
Tim Hyde (04:25):
What I don’t think they do differ. I’m gonna guarantee it’s nothing that provides the risk reversal. So let’s talk about risk reversal as a first concept. A risk reversal in a sales process is basically taking your way the reasons for someone to say no, right? Because when you’re presenting your product or service to a potential customer, they’re going to have this invisible checklist in the back of their brain.
And one of the things on that checklist will be does it work as described? We look at me out like in the outcome But your fancy marketing message actually promises me. Okay, now, the better your marketing that sends them more likely.
And then if they’ve got experience with you before, the more likely they’re gonna go tick, and then move on to the next item on that checklist, which might be, you know, can I actually afford this thing. But a risk reversal is a strategy that we deploy in sales, to tick that box, okay to basically reduce the risk for the customer, that they will get the outcome that you are promising.
And one way of doing that is by having a guarantee that says, This is what we will do in the case that we are not able to deliver upon our promise. Mm hmm. And so that’s what a guarantee is just a mechanism to offer a risk reversal, in the case that you can’t deliver your experience, product or service to the customer in a way that they would be otherwise satisfied to help.
Samantha Riley (06:02):
I think that the really important thing that you need to think as we go into this conversation is that when you’re speaking with the prospect, there’s always something going on in their mind thinking, what if I pay the money and I can’t get the result I’m looking for?
Or what if this works for everyone else? And it doesn’t work for me? You know, what? If so, it really is about taking that part of the thought process off the table, so that they can go into thinking, Alright, you know, is this actually something that I should be doing right now? Or, you know, is this is this the right thing? Yeah,
Tim Hyde (06:39):
absolutely. Ross I’m, and we’re surrounded by them, okay, we’re surrounded by guarantees, and to reverse the risk on you as the consumer, right. So if you go into any, you know, appliance, good store, right, you walk up to you look at our refrigerator, it will have a manufacturer’s warranty on it.
And what they’re saying, by putting a warranty or guarantee, in this case, we guarantee that our product will work as advertised for a period of time. After that the risk is now on you. So if you compare two refrigerators side by side, one of them has a five year warranty, and the other one has no warranty on it whatsoever.
The thought process that’s going through your mind is, well, this one, they’re guaranteeing how long this thing is going to work, their production quality. And this other company is not guaranteeing their production quality.
So the risk is all on me. Now, if you’re spending a reasonable sum of cash on your new refrigerator, or microwave or toaster or whatever, you’d go, what if it doesn’t work? What happens?
Samantha Riley (07:45):
What if I get this home and next week, it stops working, I’ve got to go out and buy a new one.
Tim Hyde (07:50):
Okay, so yeah, like pain in the ass, lost money, and so on. And so we’re surrounded by this. And then and I think what we we generally don’t see them in restaurants as much, but we’re surrounded by these things.
And particularly that it’s we’ve sort of tried to ensure or demonstrate that we’re putting the quality of our product or service, you know, we’re almost guaranteeing the way we are guaranteeing the efficacy of our product or service to a potential customer. And by putting that guarantee on it.
Samantha Riley (08:22):
I think that what it does is really builds trust with your prospect. And I feel that that guarantee almost has a level of value to it. When you were just talking about the example with the fridges, you know, I would be more likely actually 100% more likely to buy the fridge with the five year warranty.
Because there’s a value to that. I know that for the next five years, I won’t have to buy a new fridge. So there’s a monetary value to that. Where with the other one, what if I need to buy new fridge in the next six months? Will that’s going to cost me you know, this much money so so there’s a value tied to that, to that guarantee?
Tim Hyde (09:03):
Yeah, great point. Great point. I think we you know, where we see a lot and depends on the depends on the things right? You typically don’t go to the supermarket and you know, expect the guarantee on your packet of Tim Tams or coffee grounds or whatever.
But there are certain spaces where you typically see more guarantees. manufactured products, you almost always see some form of guarantee or warranty, that the product will operate as expected for a period of time. It’s almost, you know, I think you’d be hard pressed to buy a car without some form of manufacturer’s warranty or guarantee on it.
Particularly white goods where you don’t see them as much I find is in coaching consulting. I’m curious to know your thoughts and why don’t you think we do them in coaching and consulting as much or profession All services,
Samantha Riley (10:01):
I think that there is a certain amount that the client needs to actually do. So if we, as coaches say, hey, look, if you don’t get results, you know, you’ll get your money back for the client, they’ll be like, great, I don’t need to do anything, and I just get my money back, and I’ve collected all the IP along the way.
That is the fear. And that is a reality. Because in coaching, we need our clients to take responsibility, and to take action. You know, as a, as a personal trainer, if we’re guaranteeing that our client will lose 10 kilos in the next however long.
And that client then goes out and it’s a chocolate bar every day, chances are they’re not actually going to get the result they’re looking for. You’re laughing, but it’s true, right?
Tim Hyde (10:53):
I’m laughing because I just had actually chocolate before we got on that call.
Samantha Riley (10:56):
We did it sounded great. And anyway, moving on from the chocolate conversation, you know, there is as the client, you know, some things that need to happen, there are things that need to change in whatever it is they’re doing so that they get a different result.
And I think that there is, is a real fear, to have some sort of guarantee for that reason. It is very different to a product where if a product fails, there, it’s very black and white. It’s, you know, these products didn’t work. But in coaching, there’s a lot of gray area, the
Tim Hyde (11:33):
gray area, isn’t there? Yeah, I think there’s some way we look at guarantees, we look at the structure of what it is we’re offering. And what are we guaranteeing. I know, for example, you know, your guarantee, Sam is if you turn up and do the work, you’ll get a result. Right.
But you’ve got to demonstrate that you are turning up and doing the work. We almost guarantee you that if you don’t turn up and don’t do the work that you will not get the results you want. That’s the guarantee
Samantha Riley (11:56):
you don’t if you don’t turn up and you don’t implement that you won’t get the results.
Tim Hyde (12:02):
What are you what are your thoughts on because I’ve seen lots of these where people have gone, you know, we just take the stamp, right, the 100% guarantee stamp 100% guarantee, here’s my thing. 100% Guaranteed. What is your perception on that?
Samantha Riley (12:19):
Okay, I think that from a monetary perspective, it probably works in in your favor as a business owner, because it’s taking away the risk, as we were discussing earlier reasons to say no.
And not everyone’s going to call in that guarantee. Some will, but probably over the course of a longer period of time, the amount of people that will say yes, because of the guarantee far outweighs the number of people that call in and say, hey, I want my refund.
So as long as you understand that it the probably far outweighs on the on the business owners side. But I’d love to hear your thoughts, Tim,
Tim Hyde (13:04):
will I agree again, it’s taking away the reasons to say no. What we do know, and it depends on your industry. And how many people actually claim. I think that’s the big fear as business owners, but you have about offering guarantee that if I offer one, everyone will claim it.
And I’ll do all this work for nothing, I’m in a worse position than when I started. And that’s typically not the case. And I couldn’t find I couldn’t, you know, research for this particular result. I couldn’t find any specific stats that sort of gave a broader, you know, this is the percentage of people that claim on guarantees, but certainly from my personal experience is not that many. If I go back 1015 years ago, when we were selling advertising, you know, our guarantee was we absolutely guarantee that you will get leads from advertising 100% money back guaranteed.
And we must have signed five or 600 clients and none claimed on it. Okay, now, I don’t know why, but they’d forgotten about it or whatever. But I think we got to remember that, you know, guarantees are probably most important at the point of at the point. Did it mean that more people bought compared to when we didn’t have it?
Anecdotally, yes, more people did buy. I didn’t run specific numbers. And certainly, you know, in the research for what we were looking at, we can see that, you know, you can really get anywhere up to a say a 300% increase in people saying yes to an offer, if you guarantee that offer adequately and also adequately, right. So you know, if we just put 100% Money guaranteed, or what?
Samantha Riley (14:47):
Absolutely, this is the really crucial part. You need really clear terms and conditions for your guarantees, because otherwise there is a likelihood that people will abuse that so
Tim Hyde (15:00):
Step. Yeah, I mean, 100% guaranteed, I’ll say sorry, if we screw it up for you. Not really valuable in putting your customer at ease. But they said, Sure, yes. Okay. 100% guarantee that we will ignore your complaints.
Also not potentially a great guarantee. Right. But, you know, let’s look at different scenarios, I have a watch client that we’re working with. Previously, I think that at a six month manufacturer’s guarantee, and again, when we’re comparing a watch, does that mean every six months, I need to go and buy a new watch?
Samantha Riley (15:37):
Yeah, because that’s the thought is putting in your head, right? If we’re guaranteed for the six months, that means that potentially, in six months, you will need a new watch.
Tim Hyde (15:46):
It’s gonna work for six months on that little break. Okay. Yeah, if it’s 10 is, it’s a $10. Watch, I probably don’t care, right. But if I’m investing 300 400 $500,000 In a watch, and you’re telling me that’s only going to work for six months, I might think twice about buying it.
While I suggested to this particular client that we change it to a 15 year guarantee. In fact, we even talked about making a 10 year guarantee with an extra five years if you want to, if you want to buy it right again, why you end up going to your local appliance store, they’ll say, here’s the manufacturer’s warranty, would you like to buy the extended warranty?
Nice little sort of upsell bump on on top of that? Yeah. And they know that a percentage of people say yes, absolutely. And then completely forget what the warranty is. But the difference between a Costco difference between two watches, and again, it’s really important at the point of purchase, not later, at the point of purchase.
That’s what two watches side by side, roughly the same value of those two watches. One has a six month guarantee, one has a 15 year guarantee. Which watch you’re gonna buy. Okay, you probably go, oh, well, I’m leaning towards his 15.
Year handle, watch. Why? Because I now know that if I’ve got a problem with this, I can get it looked after. Now the reality is you might have looked after him anyway. Yeah, rather than even if it’s 15 years, and one day, you probably like, let me fix the bachelor balance.
I’m sorry, you weren’t, you were and he’s done. And this is the I guess this is the sort of thing we’re looking at. And again, you sort of translate this into a services environment, in a coaching or consulting thing.
We’ve got to look at what is the value of the product that you’re offering? Okay, how much of a commitment is that client going to make for it? And, you know, what is the how can we offer some form of, I guess, assurance that you can deliver what you’re promising?
Samantha Riley (17:51):
Mm hmm. So I mentioned before terms and conditions, I think that I do want to go back to that, because one of the things that can go really wrong is client expectations, not being aligned with with your expectations, or essentially what you’re proposing.
So, you know, you really do need to be very clear on what is included, what is excluded, like you mentioned the watch, then I’m pretty sure most watch manufacturers, they will include that. In the guarantee. It’ll be like the watch mechanism. But usually, it’s not the watch band.
So it’s being very clear on what is included, what’s being excluded. And what I guess rules or conditions are around this. So for example, we were talking about coaching before it’s, well, if you’re guaranteeing a certain outcome, then it’s based on you meeting these expectations, for example, you have, we need to prove that you’re on every coaching call, or we need to prove that you’ve done these modules and handed in the homework or we need to be able to go into, you know, into your social media and see that you’ve implemented this, this strategy, whatever it is, but you need to be very, very clear on what the expectations are on both sides of the fence, both for the client and for the business owner.
Tim Hyde (19:16):
Yeah, absolutely. Yeah. You know, client, you need to demonstrate you’ve done these things. And if you can, this is what we will do. I think the other thing we need to look at is what are we offering as the guarantee, what are we offering up?
And the obvious one is the, you know, you’ve seen lots of these and the satisfaction guaranteed. Okay, what does that mean?
Okay, and then, or results guaranteed, or whatever, those are typically the two things we’re gonna offer or manufacturing guaranteed, right? If it breaks, we’ll fix it. The other thing is, what are we going to do? What are we offering if this condition occurs, because it doesn’t
Samantha Riley (19:56):
always need to need to be a refund. It doesn’t always made money back, it could be at the end of this particular period, if you haven’t got the results that we guaranteed, then we will work for you or with you for free until you get the results. It could be that it could be the money back. What else have you seen,
Tim Hyde (20:20):
those are the main replacement for faulty goods, obviously, in the manufacturing contour, a good context, or replacement, or a repair within a certain period. So you see that typically, again, with with product base, from a service base, it’s typically, you know, we’ll continue to work until or, you know, we’ll we’ll refund some or part of your money, you know, for for your investment, right.
So, say you’ve got a 12 month program, if you’re not really happy with the program, you know, after 30 days, 60 days, 90 days, 180 days, whatever the number you want to come up with, will refund you the unused part of the program. So it doesn’t even have to be an entire commitment.
Okay, I’ve seen others where, you know, we’ve got more than 100% guarantee. Okay, so if you think we’ve wasted and you’ll see these ones, if you think we’ve wasted your time, we’ll donate it give you your money back, but we’ll give you $100 amazon gift voucher. Okay.
Now, again, all we’re doing here is we’re trying to reverse the risk that the customer goes in hasn’t actually been worthwhile doing this thing. Okay. Again, most people don’t claim on guarantees. This is a truth.
Okay. In fact, when we’re looking at what the guarantee is, sometimes the bigger the guarantee, the less likely it is they’re going to claim on it. Will people claim it? Yes, some? Absolutely. Well,
Samantha Riley (21:49):
and that’s what I was going to say you do need to make sure that if you’re offering some sort of money back guarantee that you do have funds split off for if it happens.
Tim Hyde (21:59):
Yeah, so put something aside, just in case. You know, don’t go and spend it all then suddenly go Oh, shit. I can I can make the guarantee. But you’ll have to wait for next month.
Samantha Riley (22:13):
Exactly. I think the last thing that we need to talk about here is actually implementing that guarantee. So if someone does claim on it, because it can, it can be a challenge to logistically implement a guarantee.
But I think that this is really important. Because if you offer a guarantee, and then make it next to impossible for someone to claim it, I think you’ve actually got more chance of leaving a sour taste in someone’s mouth than even if you didn’t offer the guarantee in the first place.
Tim Hyde (22:44):
Yeah, absolutely. You must have jumped through this 7000 holes to claim on this thing. I mean, insurance is terrible at this run. Insurance is federally guaranteed, you pay us this money. And we will guarantee if you think these things happen to you, we will pay you some cash
Samantha Riley (23:02):
circumstance that you that you protect personally have.
Tim Hyde (23:07):
That’s effectively you’re just guaranteeing a part of your life, right? You know, you’re paying someone to money in the event that if these things happen, they’ll give you a stack of cash. But they’ll make you jump through a bunch of holes to demonstrate it. And you know, they’ll look for loopholes.
And if it’s, you know, type a thing and not a type B thing that are insured for your shit out of luck. Yeah, totally, totally. So you’ve got to make them realistic. And you’ve got to honor them as well. If someone claims on your thing and says, Hey, look, it’s really not working for me, you’re probably actually better off, you know, honoring your guarantee, honoring your word about that.
Because this, the idea that you will otherwise receive on social media is probably not worth a negative reputation.
Samantha Riley (23:54):
Yeah. So just to recap, guarantees and risk reversals are a great way to increase your conversion rate. By taking away that risk. You’re building trust and building value.
But you do need to be very, very clear about what is included and what is not included, what the terms and conditions are of that guarantee. And then make sure that you manage that guarantee process.
Have the funds aside if that’s what your what your guarantee is, make sure that they don’t need to jump through 7000 hoops because that just does not leave a good taste in anyone’s mouth.
Tim Hyde (24:34):
Do you have anyone to claim on your guarantees are? Often
Samantha Riley (24:39):
not often, but I have because this is something in business. You cannot keep 100% of people happy 100% of the time, and that’s a really tough pill to swallow. And it’s horrible when it happens. But it happens you No,
Tim Hyde (25:01):
no actually say not happy, Monica.
Samantha Riley (25:04):
Very, very weird ones. We just like, You know what? Leave me alone. Let’s just deal with this right now.
Tim Hyde (25:13):
Yeah, I must admit, I must admit sometimes, you know, again, like your insurance. If you make some conditions, I think it’s important, particularly for doing a program where you’ve got some responsibility on your client to do things they need to demonstrate they’ve actually done them.
You know, I’ve, I, historically, I’ve done I’ve tried various models, I’ve tried actually having a public guarantee, and not certainly when I’ve not had a published guarantee, if someone said, I’m not happy with it, sometimes I’ve just refunded them anyway. And so I might as well have the guarantee published in the first place, right?
Because I know that increased sales, we were just talking just before about a new guarantee that I’m offering on my services. And it’s 100% money back guarantee, within 90 days, if you’re not happy with the results we’re creating for you, in the time you saved or the leads you’ve grown, and you’re like, Oh, my God, doesn’t that come with a lot of cost? It does come with a cost to me.
Right? It’s not free, you know, I’ve invested a lot of cash to creating those results in the first place. But it’s not a small ticket item, either. So I think the bigger the tickets, the better off you are or the guarantee as well.
Samantha Riley (26:28):
Yeah, totally. Because the more someone’s paying the more, I guess fear there is that they could make the wrong decision.
Tim Hyde (26:35):
That’s right, you know, so $100, you could probably get away with not having a guarantee, right? So your $100 course, probably don’t need a guarantee. Unless for that particular person you’re trying to reach with that $100 That’s a lot of money.
Okay, $100,000, you probably need a guarantee, unless the person you are trying to reach for that $100,000 $100,000 isn’t very much money. So put it in context of who it is that you’re trying to reach.
If it represents a significant investment, definitely think about some putting some form of warranty or, or guarantee on that investment for them. And you’ll find that your sales will go up. And again, very few people will claim on it.
Samantha Riley (27:20):
Love it. Great conversation. As always, hopefully we’ve given you some ideas to noodle over in your head and decide whether you want to offer a guarantee or not. We’ve talked about quite a few reasons that you do want to. And definitely if you do decide that you’re going to offer a guarantee to put some very tight terms and conditions in place.
If you’ve got any questions, please reach out to us on socials. We always like to keep the conversation going. But thanks for tuning in for another episode and we’ll catch you all next week on another episode of Influence By Design.
Samantha Riley Outro
Thanks for joining me for this episode of the Influence By Design podcast. If you want more head over to influencebydesignpodcast.com for the show notes and links to today’s gifts and sponsors. And if you’re looking to connect with other experts who are growing and scaling their business to join us in the coaches, thought leaders, and changemakers community on Facebook, the links are waiting for you over at influencebydesignpodcast.com
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