Guarantees work.

A third-party provider of guarantee seals did split tests that showed that its guarantees help clients increase conversion rates by 6.0%, 7.6%, 9.9% and 11.3%. Impressive results!

Customers love them, especially unconditional money-back guarantees. That’s why guarantees boost sales.

But sometimes, your product requires your customers to (gasp!) make an effort in order to achieve their desired outcome. Maybe you’re a web designer and your client needs to approve mockups quickly so you can hit your deadline. Maybe you have a web app, and your clients need to log-in and use the app. Or maybe you’re a nutritionist, and your client needs to stop eating ice cream.

If your customers need to do more than swallow a magic pill to get the results they want, a guarantee can perversely encourage your customers to not even try to make an effort. After all, lazy customers can just do nothing and get a refund.

Guarantees can result in customers paying nothing and not getting the result they want. That’s a bad result for them, and a terrible result for you.

So how can you benefit from increased conversions from guarantees, without refunds wasting your time and destroying your profitability?

When Are Guarantees Bad For The Customer?

Guarantees can generate high refunds precisely because customers can get a refund with “no hassle”.

It turns out that offering an 100%-satisfaction, no-hassle guarantee can sometimes be a disservice to your customer!

Let me explain with an example. Let’s say you’re selling a consulting service that helps people lose weight. You have a great solution that pretty much guarantees that if people follow your plan, they will lose weight. In fact, for the purposes of this example, let’s say that 100% of people who follow your plan will lose weight. 100%!

So let’s say that you slap an unconditional guarantee on your weight loss consulting product…

From the customer’s perspective, he has two options:

1. Work hard, lose weight. The customer can stop eating ice cream, and lose 20 pounds. But it’s hard work, so the customer procrastinates.
2. Do nothing, get money back with “no hassle”. The customer can eat ice cream for every meal, gain 20 pounds, and still get his money back.

I don’t know about you, but I happen to like ice cream, so the answer seems obvious! 🙂

Guarantees give customers a perverse incentive to do nothing, and that’s a problem when the customer actually needs to make an effort in order to achieve her desired outcome.

So how do you construct your guarantee so that your customers will make the smallest bit of effort?

Stop Giving Customers An Incentive To Not Do Anything

You can’t address this problem if you guarantee “100% satisfaction” to your customer.

Instead of using a bland unconditional guarantee, start by creating a Specific Guarantee that guarantees a specific desirable outcome for the customer. The desirable outcome should be measurable and quantifiable, so you can track metrics towards that goal.

To make this more concrete, I did a billion Google searches and found a weight loss service that has a great Specific Guarantee that guarantees a specific desirable outcome for the customer.

Retrofit guarantees that customers will lose at least 10% of their body weight and keep it off for over a year. If a customer doesn’t achieve that desirable outcome of losing 10% of his body weight, he gets another year of services from Retrofit.

Retrofit’s service costs $259/month for a minimum of 12 months, so it’s pretty pricey. My first specific objection as a prospect would be will this really work to help me lose weight and keep it off? Retrofit will likely have to neutralize this specific objection in every prospect that isn’t a word-of-mouth referral. This Specific Guarantee guarantees me the outcome I want, so it’s perfect.

But Retrofit didn’t stop there. After all, Retrofit isn’t going to lose weight for its customers. Customers have to do that themselves. So Retrofit also specifies what customers have to do in order to qualify for the guarantee.

Lower Refunds And Create Happier Customers By Using A Mutual Promise Guarantee

Retrofit helps motivate its customers by not offering an unconditional guarantee. Instead, they use what I call a Mutual Promise Guarantee. In a sense, this is the opposite of an unconditional guarantee, because they don’t just give refunds willy-nilly. Customers have to honor their own promise before you will honor your promised guarantee. In most cases, the customer’s promise is to do things that indicate an sincere effort to use your service.

The first part of Retrofit’s Mutual Promise Guarantee is what they call their “No Fail Promise.” Here is what Retrofit promises:

The Retrofit Promise

You will lose at least 10% of your current weight and keep it off through the end of the 12-month program.

If you meet your commitment and do not hit the weight loss goal specific to your personalized plan, we will provide you with a second year of services free.

See the part where it says “If you meet your commitment”? That’s where Retrofit first refers to “Your Commitment” aka “the things you have to do in order to qualify for this guarantee”:

Your Commitment

• Complete your online intake form
• Wear your smart activity tracker everyday
• Weigh yourself regularly on your wi-fi scale
• Meet 1:1 12 times with your experts
• Make every effort to eat & exercise according to your expert designed weekly plan

Every Mutual Promise Guarantee has two parts:

1. A Specific Guarantee that guarantees a specific desirable outcome
2. Specific things customers must to do to show a sincere effort to use the product, which qualifies them for the Specific Guarantee

I love Retrofit’s Mutual Promise Guarantee because I’m certain that Retrofit knows that customers who stick to their plan will actually hit their goal. Meanwhile, I am pretty positive that customers who don’t lose weight on Retrofit don’t regularly weigh themselves or follow any of the other steps. And even if the customer didn’t lose weight, Retrofit is not on the hook for a cash refund, just another year of services.

In other words, this Mutual Guarantee costs Retrofit nothing (or very little) to offer, while also neutralizing the most common specific objection that prospects have. Sounds like a pretty good deal to me!

By the way, this No Fail Promise guarantee is fantastic, so I am surprised that the No Fail Promise only appears when you click a link at the bottom that says “No Fail Promise”. I would feature it much more prominently on that landing page. In fact, I would test putting the No Fail Promise as the first thing on the very top of that landing page.

“Mutual Promise Guarantees prevent refunds by encouraging customers to make an effort to use your product.”

The Two-Step Formula For Creating A Mutual Promise Guarantee

OK, I admit that creating a Mutual Promise Guarantee is a bit harder than slapping a “Money Back Guarantee” seal on your landing page. But if you follow this two-step formula, it’s pretty easy…

Step 1: Create a Specific Guarantee

First, instead of using a bland unconditional guarantee, start by creating a Specific Guarantee that guarantees a specific desirable outcome for the customer.

Create a Specific Guarantee that guarantees a desirable outcome your customers want. For instance, fertility clinics are increasingly offering packages that guarantee that couples will have the desirable outcome of having a baby, or their money back.

Step 2: Create a “Your Commitment” That Specifies What The Customer Needs To Do To Achieve That Desirable Outcome

Retrofit says that its customers must do five things, which it calls “Your Commitment”. If a customer doesn’t follow through on the tasks in “Your Commitment”, Retrofit won’t have to pay a refund.

Likewise, you can craft a “Your Commitment” for your customers. If you operated an fertility clinic, you might require your customers to go through multiple “In Vitro Fertilization (IVF) cycles”. An IVF cycle can include hormone injections that cause severe mood swings, so it’s a lot of effort. The odds for a live birth go up the more IVF cycles a woman completes, so fertility clinics with guarantees prefer clients go through multiple cycles. This clinic requires four cycles. As its FAQ says:

Can I opt out and discontinue treatment prior to completion of four cycles of treatment?

Yes, but in such case you will not receive a 100% refund.

One way of figuring out what you want to require your customers to do is to think about your past annoying and unhappy customers. Create a “Your Commitment” that lists things customers have to do to not be annoying. I can think of a billion annoying things my customers have done over the years. I’m sure you can too. 🙂

That’s it! You’re done!

What’s Next

1. Follow the two-step process above to create a Mutual Promise Guarantee. Then create a split test and see if your new Mutual Promise Guarantee improves your conversion rate. I’d appreciate it if you let me know how this strategy worked for you!
2. If you found this useful, please share it with your friends. 🙂
3. Let me know what you think in the comments!