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Why Not Guarantee Professional Services?

by Michael W. McLaughlin

In the 1830s, Cyrus Hall McCormick invented the world's first mechanical reaper, a machine with the potential to improve farmers' productivity tenfold. Astonishingly, farmers remained uninterested—or at least unconvinced. For 9 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 professional services.

In fact, professional service providers often have a visceral, negative reaction to the very idea. A consultant once asked me what factors most influence a client to buy 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.

Those who shy away from guarantees rationalize their aversion. After all, the reasoning goes, clients expect the highest-quality service from us, so a guarantee isn't needed. And given that clients work right alongside us on projects, why should we 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 professions, and respect for the client, are diminished if you hype a guarantee during the sales process.

The anti-guarantee argument also suggests that a guarantee is a sign of weakness. Why plant the seed of thought 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 were to demand that the firm 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.

Think about it. A guarantee isn't as scary as it may sound. You probably 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 benefit you?

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

A guarantee benefits clients and you. Nothing shuts down the bad habit of over-promising than the specter of a guarantee. With a guarantee in place, you 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 assignment.

Another benefit of offering a guarantee is that it can enhance a firm's culture of service quality simply because practitioners know that the firm has its reputation and financial health on the line for every project.

Like everything, guarantees aren't for every business. 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. Also, 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?

A good guarantee is simple and unconditional. David Maister, a consultant to consultants, offers this guarantee on his website:

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:

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 that the guarantees don't mention a specific outcome—only that the client has recourse if not satisfied. Some link their guarantees to deadlines; others peg the guarantee to specific project milestones and outcomes.

7 Tips For A Great Guarantee

Make the guarantee simple and unconditional. Drop the excuses, fine print and legalese.

Be sure your entire organization embraces the operating philosophy dictated by the use of guarantees.

Know your clients well enough to judge when a guarantee is helpful and when it isn't.

A guarantee should be a 2-way street, so include some upside if you exceed performance expectations: ask for "success" fees.

Keep the discussion of the guarantee alive during the project. Monitor performance carefully to avoid surprises.

Specify which client individuals are authorized to "call in" the guarantee, and make it a limited number.

Respond quickly if a client requests that you make good on your guarantee.

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

You should take another look at what you 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 the co-author, with Jay Conrad Levinson, of Guerrilla Marketing for Consultants. He is also a principal with Deloitte Consulting LLP and the publisher of Management Consulting News.

 

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Thursday, 14 Dec 2017 11:46 AM

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