Guarantees, especially blatant ones, really do increase the response to your marketing (by up to 350%) and can increase sales dramatically.
So…here’s some information to give you further insight into just how powerful guarantees can be. This time…as a management tool.
You see, guarantees are a double-edged sword. On the one hand, a tool to empower customers, and on the other, a way to empower your team.
In fact, guarantees can sharpen your team’s focus on customer service. So much so, it could literally change your entire business—for the better. Not only that, guarantees can help you solve those nagging internal issues.
So lets find out how and why it’s important to offer a guarantee, educate your team, and why the odds are, simply, worth taking.
(Some examples here will come from a great book called Extraordinary Guarantees by Christopher Hart [out of print]. Hart outlines the extraordinary power of guarantees to help you build sales and become better known.)
Tap into a management tool to grow your people AND your business (and some examples for you)
Let’s take a successful hotel chain as an example. A chain that started with just one hotel. Four years ago, Ray Schulz opened the first Hampton Inn, now a chain of 200 economy hotels across the United States. Listen to Schulz telling the story. It’s fascinating:
“Two years ago I opened an issue of Business Travel News and found Hampton Inn listed as America’s number one economy hotel system. I was pleased with the ranking, of course. But it also made me worry.
We were just a little more than 4 years old at the time, with fewer than 200 properties in operation. We had achieved our success through long hours, strict attention to every product and service detail, and the sense of motivation that comes from venturing into uncharted territory.
But with our success came new challenges. The business had grown rapidly, expanding into 40 states. Like most other companies in our industry, turnover among our service personnel was high. And hotel marketing was getting more crowded every day.
I wondered how we could be sure that every air-conditioner was working, every carpet was clean, and every bed was freshly made in each of our 23,000 rooms. I worried that our new employees might not share the sense of motivation our original team had. And I worried that a slip in our standards would send unhappy guests somewhere else.
To maintain the quality of our service, we began devising employee retention strategies. We also looked at proposals for building customer loyalty. But rather than devising a complex mixture of strategies to satisfy these two concerns, we discovered that the solution to both challenges lay in a single promise. We would guarantee our guest a satisfying stay, and we would empower our employees—every regular employ who deals with customers—to fulfil that guarantee.
In October 1989, after several months of planning and testing, we announced our unconditional 100% satisfaction guarantee—first in the U.S. hotel industry. It states that if our guests have a problem or a complaint at any time during their stay and are not 100% satisfied when they leave, we’ll give them one night’s stay for free.”
In fact, it was promoted as this:
‘There’s only one hotel chain that guarantees your complete satisfaction with every visit—Hampton Inn. If you’re not 100% satisfied with your Hampton Inn stay, we don’t expect you to pay.’
Sounds impressive, doesn’t it? Even more so when you hear what Ray Schulz has to say about how it works:
“From a management perspective, the secret of making the guarantee work is giving our employees the authority to implement it. The Hampton Inn program authorises all employees, not just the hotel manager or the front desk personnel, to take whatever action is necessary to keep the customer satisfied.
For instance, one of our housekeepers might notice that a guest is getting frustrated because his key won’t work in the door. Instead of simply referring the problem to the front desk or calling the maintenance department, the housekeeper will take responsibility for getting a new key, changing the lock, or arranging for a different room.
If the guest still isn’t happy, the housekeeper may offer to refund the cost of the room for the night without contacting the manager.
It sounds logical enough, but frankly, it’s not the way most companies expect their employees to behave. Companies historically have looked at hourly employees as taskmasters paid to do a specific job, no more and no less. We encouraged our employees to break loose from the constraints of the traditional job description.”
But according to Schulz that wasn’t enough. “During the first 6 months, the number of guarantees invoked was 0.1%, way below our original projections,” he says.
“While those numbers assured us that most guests would not take unfair advantage of the guarantee, they also indicated that our employees were not totally comfortable with their authority to implement it. For the guarantee to be truly effective, our employees had to adopt a more proactive attitude toward service.
We completely revamped our training program to reemphasise how ensuring guest satisfaction can help us to improve our service. More importantly, however, we had to assure our employees that we would stand behind their decisions 100%. An employee who judiciously breaks the established ‘rules’ in the interest of service, even if it means returning a guest’s money, merits a commendation from our owners and managers.
Our general managers raised some concerns, but we expected that. Any good manager will question, as ours did, how a service guarantee will affect the hotel’s bottom line. They also wondered how reporting service glitches and giving away room nights could possibly enhance their reputation in the eyes of the corporation.
We responded by challenging our managers to recognise how the unconditional guarantee could build customer loyalty throughout the Hampton Inn chain. We assured them that, in the long run, ensuring guest satisfaction would keep our customers coming back. If all that was too much to ask, we simply asked them to give the guarantee a chance to work.
Little more than one year later, we could back our assurances with evidence of success.
For one thing, quality standards went up. Tracking customer complaints has helped us to make improvements where they are necessary and to develop a sharper eye for potential problems. Entrusting our employees with the authority to ensure guest satisfaction has given us eyes and ears in every hotel that are alert to potential service problems.
We also have detected a definite improvement in employee retention. In a recent survey, our employees told us they feel more motivated and enthusiastic about their jobs. They are working harder to satisfy our guests and paying more attention to quality on the job. We haven’t yet verified that empowerment is the reason for the lower turnover rate, but any good manager knows that an enthusiastic employee will stay on the job longer.
Finally, we can measure our success on the bottom line.
Our latest research indicates that approximately 2% of our system’s total room night are customers who said they stayed with us specifically because of our guarantee. Our research also tells us that the satisfaction guarantee strengthens customer loyalty.
For example, about half of all guests who complain about service problems after their stay indicate they will come back to Hampton Inn. But of those guests who invoke the guarantee before leaving the hotel (the guarantees are in the form of a reimbursement, not a voucher for later use), 86% say they will return to Hampton Inn and 45% already have.
What they most likely found was a rejuvenated staff eager to please. Empowerment is keeping us young by helping to ward off the sagging standards and slumping morale that can Guarantees can motivate employees to achieve unprecedented levels of performance. Eliminating customer dissatisfaction is a very different goal from the everyday incentives and threats of the business world. Like a sports team under pressure, an organisation can be energised by raised stakes and the unusually high level of performance that is being asked of it.
An extraordinary guarantee can provide a sense of mission and a feeling that each employee’s actions count for something. If employees at all levels know their actions can prevent a customer from demanding a refund, they feel they’re in a position to contribute directly to the bottom line and add to the company’s success.
Developing a guarantee that raises the standards or raises the bar, so to speak, required for your business to operate on a day-to-day basis will make you stand out from your competitors and in the process will completely transform your business from the inside out. What better way to get your team more committed?
Still not convinced? There’s no shortage of examples to demonstrate the effectiveness of empowerment! Here are a few more.
Bugs get the ‘bugs’ out of a pest control business
One of the best guarantees comes from a pest control business—the Bugs Burger Bug Killer Company. You may remember this from ‘Guarantees—A Sales Opportunity.’ They state their guarantee blatantly, like this:
‘You don’t owe one cent until all pests on your premises have been wiped out.
If you’re ever dissatisfied with BBBK’s services, you will receive a refund for up to 12 months of the company’s services PLUS fees for another exterminator of your choice for the next year.
AND, if a guest spots a pest on your premises, BBBK will pay for the guest’s meal or room, send an apology, AND pay for a future stay.
AND, if your facility is ever closed down due to the presence of roaches or rodents, BBBK will pay any fines as well as all lost profits PLUS $5,000.’
(As mentioned earlier, this company is now a $30 million a year business—it owns 80% of the marketplaces in which it operates AND IT CHARGES 10 TIMES AS MUCH AS THE NEXT GUY—literally).
Founder Al Burger has some wise words: “The promise can’t simply be a marketing tool, it must be built into the operational structure, and the guarantee must be so self-punitive, the costs of mistakes so high, that producing the promised result is the only viable alternative. That is a formula for something a bit more permanent than this year’s hot marketing gimmick.”
Take it a step further
You can also create guarantees specifically to combat internal issues. Doing this will save you time and money on your investment in your human resources.
For example, a manufacturing company established an on-time meeting guarantee. Anyone who arrived late for a meeting had to pay $100 to every other person in the room. Pretty steep? Yes, but not compared with the cost of having highly paid executives waste their time waiting for a meeting to start.
Another, a consulting firm this time, set up a ‘clean desk’ guarantee. All desks must be left in an orderly state at the end of the day, or the team member must pay a fine into the office entertainment fund. A clean desk may sound like a trivial matter, but the company felt that neatness helped cultivate an atmosphere of professionalism and efficiency.
As an important bonus, some managers discovered that their inability to keep their desks clean indicated that they had fundamental problem with the way they organised their work, time, and information. Addressing these more basic flaws improved their overall performance.
Guarantees such as we’ve been talking about (guarantees based on REAL performance) have real power. Power to attract attention in the marketplace, increase sales, improve profits, AND motivate your team.
Our way of doing things is unique and it’s why it produces unique results for our clients…
We would love the opportunity to help you clear your head on what is the right way for you to accelerate your business…
We highly recommend you watch this step-by-step case study of how we grew Beefy’s Pies into a Famous Aussie Icon from a small stressed out bakery into a family owned chain. Click here to get all the insights into their success…
Or if you have heard enough about how we work with our small business owners, then let’s have an off the record chat about your current situation and see what we can do to immediately guide you…click this link to see what time best suits you.
P.S. Ask if our Boardroom Program intake is open for enrolments…It works best for business owners who see the benefit of having us on as their ‘external partner’ so that they are not alone in the day to day decisions of their business.