The Guarantee

This is a touchy subject. And it should be. What are you willing to Guarantee? How will you hold yourself and your business accountable to your customers?

Is it unique in your industry?

Is it truly a valuable guarantee? Or is it filled with so much fine print that it is worthless?

Do you even offer a guarantee? Why not? Are you willing to take a stand, to set the bar high enough that you are willing to back your words with a guarantee?

For more on this subject, here's an article from my email:

'I Guarantee It:' The Power Of Promising To Deliver Results

By Michael W. McLaughlin, Contributing Editor

While standing in a store's checkout line, I noticed a sign that read, "If we fail to give you a receipt, your purchase is free." Now that's a guarantee.

By contrast, the California public utility giant, Pacific Gas & Electric, offers eight customer service guarantees, each with more exclusions than an earthquake insurance policy. PG&E's guarantee looks more like congressional legislation than a pledge to satisfy customers.

Should consultants use guarantees for their service offerings? I think so, and here's why and how to use them effectively.

Think Guarantees

In the 1830's, Cyrus Hall McCormick invented the world's first mechanical reaper, a machine with the potential to improve farmers' productivity ten-fold. Astonishingly, farmers remained uninterested - or at least unconvinced - because for nine years, sales were virtually zero as McCormick's brilliant invention languished in the barn.

McCormick changed all that when he decided to offer a written, money-back guarantee on the reaper. Sales skyrocketed, and McCormick went on to become one of the wealthiest men in America.

Since that time, guarantees, especially on products, have become commonplace. But guarantees have only inched their way into consulting and other professional services.

In fact, consultants often have a visceral, negative reaction to the very idea. A consultant once asked me what factors most influence a client to buy consulting services. "Have you ever considered offering clients an unconditional guarantee?" I asked.

The response: "Uh, do we look like we're selling appliances here?" I took that as a no.

Too many consultants shy away from guarantees, and then rationalize their aversion. After all, their reasoning goes, clients expect the highest level and quality of service from us, so a guarantee isn't needed. And given that clients and consultants work together on projects, why should consultants be accountable if the project runs into the ditch?

The resistance to offering guarantees runs deep. Some suggest that guarantees reek of the cheesy practices of used car salespeople and late night infomercial hosts. The purists proclaim that the dignity of the industry, and respect for the client, are diminished when the consultant hypes a guarantee during the sales process.

The anti-guarantee argument also says that a guarantee is a sign of weakness. Why plant the seed of the notion in the client's mind that service failure is even a possibility? And to wrap the argument up in a nice, tidy package, many worry that a firm could lose its collective shirt if a client demanded the consultant make good on a guarantee.

Get Over It

It's time for a change, and winning firms know it.

Consider this: A guarantee of promised results is among the top criteria that today's clients use to select professional service providers. And few firms are providing that assurance, leaving an important, competitive differentiator on the table.

A guarantee isn't as scary as it may sound. Most consultants work under an implied guarantee anyway. If you have a legitimately unhappy client, won't you fix the problem by doing additional work or reducing your fee? In that case, you are effectively making good on an implied guarantee. Why not offer it for real and upfront where it can do you some good?

Consultants' marketing literature is full of claims about the quality of their services and their dedication to client results. Without a guarantee to back up those words, though, clients just perceive empty promises. If you're serious about service excellence and client results, put some teeth into your assertions.

A guarantee has benefits for clients and consultants. Nothing shuts down consultants' bad habit of over promising than the specter of a guarantee. With a guarantee in place, the consultant and client must reach precise agreement on project objectives, outcomes, and measurements of satisfaction. This level of rigor leads to a less ambiguous proposal, a more rational price, and better marching orders for those working on the project.

A consulting firm benefits in other ways from offering a guarantee. It can enhance a firm's culture of service quality simply because consultants know the firm has its reputation and financial health on the line for every project.

Like everything, guarantees aren't for every consultant. If your service offering is immature, a guarantee may add a lethal level of risk to your practice. A handful of service failures could put you out of business.

Some clients are not that interested in guarantees. You have to judge each situation. And lastly, if the client's perception of your service quality is high and the industry is well-known for top-notch service, a guarantee may not be much help - though it can't hurt either.

What Makes a Good Guarantee?

For consultants, a good guarantee is straightforward. David Maister, an authority on professional service firms, offered this guarantee on his Web site:

"These fees are subject to an unconditional client satisfaction guarantee: If when the work is done, the client does not feel that full value was received, then the client decides how much it was worth and how much to pay (if anything)."

Here's another example from a consulting firm:

"Our work is guaranteed to the complete satisfaction of the client. If the client is not completely satisfied with our services, we will, at the client's option, either waive professional fees, or accept a portion of those fees that reflects the client's level of satisfaction."

Both statements are clear. Notice the guarantees don't mention a specific outcome, only that the client has recourse if not satisfied. Some consultants link their guarantees to deadlines; others peg the guarantee to specific project milestones and outcomes.

Seven Tips for a Great Guarantee

• Make it simple and unconditional. Drop the excuses, fine print, and legalese.
  
  
• Be sure your entire organization embraces the operating philosophy guarantees require.
  
  
• Know your clients well enough to judge when a guarantee is helpful and when it isn't.
  
  
• A guarantee should be a two-way street, so include some upside if you exceed performance expectations: ask for "success" fees.
  
  
• Keep the discussion of the guarantee alive throughout the project. Monitor performance carefully to avoid surprises.
  
  
• Specify which client individuals are authorized to "call in" the guarantee, and limit that to the few people really in the know.
  
  
• Respond quickly if a client requests that you make good on your guarantee.

With or without a guarantee, consulting is a risky business. But clients risk just as much or more when they hire you. Your offer of a guarantee will show that you are willing to share the risk, making the relationship a true collaboration.

Consultants should take another look at what they put on the line for clients. Offer a real guarantee and, like Cyrus McCormick, you may get some of your best work out of the barn.

---

Michael W. McLaughlin is a RainToday.com Contributing Editor, a Principal with MindShare Consulting, LLC and the co-author of Guerrilla Marketing for Consultants. He is also the publisher of Management Consulting News and The Guerrilla Consultant. Before founding MindShare Consulting LLC, he was a Partner with Deloitte Consulting, where he spent more than two decades helping clients.

Sphere: Related Content