"The Four Components of Every Offer" (510 words)
While historically used primarily in "bill me later" offers, such credit card offers are becoming increasingly popular. Marketers love their high retention rates, and consumers like their added convenience.
You will, however, need to promote a strong incentive or soft trial terms on the front end to get large percentages of your customers to try a negative- option credit card trial offer. Usually the higher retention rate produces enough of an increase in long-term profits to more than compensate for the up-front cancel cost.
If you're selling merchandise via the Web, direct mail or catalogs, your product guarantee plays a key role in your offer.
Because your customers can't touch, feel or see your products as they could in a retail environment, you need to make them feel little risk of being stuck with something they may not like. You can do this by providing customers with a no- risk, full-refund, satisfaction-guarantee offer.
The Impact of a Guarantee. With a hard offer and product or service of reasonable quality, cancellations usually are only 5 percent to 7 percent of gross sales.
Since a prominently displayed 100-percent satisfaction guarantee can increase gross response or Web page conversion by 5 percent to 15 percent, you'll usually come out slightly ahead. And offering a guarantee generally helps build long-term customer loyalty.
Risk vs. Reward. If your cost of goods and your cancel rates are low, promise a full hassle-free, no-questions-asked refund within a specific time frame, (which usually varies by the industry you're in).
But if cancel rates are greater than 7 percent of gross sales, or you're concerned about a high cost of goods, ask others in your industry what response lifts and return rates they think they're getting. Then run those numbers through your own profit-and-loss analysis to weigh your potential risk vs. potential reward.