Money-Back Guarantees: Do They Work for Marketing to Schools?

Have you tried a money-back guarantee to convince prospects to purchase your products? The "risk-free" promise is popular with sellers of consumer goods and is a solid offer to sell catalog items to teachers, but is it a hook to persuade administrators to purchase big-ticket solutions?

When I was sales and marketing manager for an educational software company, I personally grappled with this issue, and tried many methods to speed up the decision-making process. Gaining a commitment from a senior school administrator for tens of thousands of dollars took months, sometimes years. 

Dave Kahle's advice in his recent STS article "How to Handle the High Price Objection," reminded me of opinions I've heard about money-back guarantees and my own experience with strategies to help administrators manage risk. I decided to invite members of LinkedIn groups I participate in and a few of my industry colleagues to share their perspective.

Are Money-Back Guarantees a Sales Gimmick? 

John Campbell, president of Cambium Learning, was the first to weigh in. "I do not believe money-back guarantees are a very compelling tactic. School districts are smart enough to realize two things: these guarantees often have loopholes (money back if implemented with fidelity...) and if the product doesn't work, the guarantee of money back is going to be an insufficient return for their valuable time. More compelling to large school districts is success in their school district on a pilot basis before they expand to a larger portion of the district."

John makes an excellent point. Most product guarantees are insurance, protecting the buyer's investment when products are defective. But for sophisticated educational software and other instructional solutions, defects are not usually the issue. The question is, if the product is used as recommended, will it produce the promised outcomes in student achievement? School administrators know very well that no instructional resource, even the best teachers, guarantee success.  

Education marketing consultant Frank Catalano, principal of Intrinsic Strategy, thinks a guarantee has limits. "I think money-back guarantees do work. They show that a company is willing to stand behind its product. However, I don’t know if they are as much of a factor with big sales, because in those cases, the purchase is not without lots of direct contact and negotiation. Money-back might get the attention of the senior administrators and help get the conversation started, but won’t close the deal or be a final decision-making factor," he said.

Marshall Eubanks, Director of Strategic Sales for RM Learning, offered a similar perspective. He recently shared with me his experience with a money-back guarantee, calling it a "dream come true" from a marketing point of view. As Frank Catalano says, it does get the attention of administrators. But Marshall pointed out, during the decision-making process, as front-line stakeholders get involved, "skepticism prevails and questions arise." How can a solutions provider guarantee outcomes if teachers can't? If the software works that well, what would that say about our teachers? "Teachers don't like the idea," said Eubanks. "The offer becomes irrelevant and focusing on fidelity of interventions opens up a 'can of worms' related to established pedagogy and alignments with intervention methods that enjoy almost religious followings."

Daryl Koroluk, a board member at SETA (Saskatchewan Educational Technology Association), takes a slightly different view.  He believes some kind of assurance program is needed. "Although I agree with John (Campbell) on the aspect of doing your homework upfront prior to engaging in a large scale software project, I also subscribe to due diligence in the crafting of the final contract details and the need to clearly outline the deliverables with penalties articulated in non-delivery," says Koroluk. "That means writing in a bail-out clause that does not let vendors that over-promise off the hook."

I understand Daryl's perspective. Early on in my career as a sales rep calling on school administrators, when faced with end-of-the-quarter rush to close sales, I sometimes stretched the truth. Later, as a sales manager, I had to coach some enthusiastic sales reps who made promises that they couldn't deliver. Pressure on sales people to "make the number" sometimes causes them to set unrealistic expectations with prospects in order to close a deal. It's a fact of life in the high-pressure world of sales.

Marc Strohlein, Principal Consultant at Agile Business Logic, thinks along the same lines as Daryl. "There should always be an out clause with specific, measurable, or at least objective metrics for defining whether the product works as advertised. And vendor promises and commitments large and small need to be captured."

The Bottom Line on Money-Back Guarantees:  Be Honest and Tread Lightly.

Let's face it. Money-back guarantees are appropriate for physical products that may have defects. But selling high-end instructional solutions to schools is not like working at Men's Wearhouse. Claims of "You're gonna look great -- I guarantee it" from the company president won't cut it. On the other hand, buyers do need some assurance that their investments will pay off. The recommendations offered by Dave Kahle resonate with me, and complement my advice from front-line experience: 

  • Connect prospects to customers who will share their real-life experiences  
  • Be honest about the design and limitations of your product; no product solves every problem
  • Earn your prospect's trust by following through on your commitments early in the sales process
  • Be prepared to guide implementations for success
  • Be clear about what is expected of the users to make your product work
  • Don't make promises you can't deliver

A former client of mine, who was CEO for a developer and marketer of high-end educational software, compared selling instructional solutions to selling exercise equipment. Offering a money-back guarantee for a complex solution is akin to guaranteeing weight loss for someone who purchases a treadmill. If the treadmill motor breaks or the drive belt snaps prematurely, the buyer should get a refund or replacement. But if the buyer doesn't use the treadmill to exercise as often or for as long as is recommended, if it collects dust in the corner of the basement, whose fault is it? How many people buy treadmills based on before-and-after photos of people who need to lose weight? How many thousands of dollars have been spent for instructional software with the promise of AYP gains, only to be under- or improperly or insufficiently used? You decide what's appropriate to promise and what you can responsibly and realistically guarantee. Then its up to the buyer to run with it!

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About the Author

Glen McCandless is president of Focus Marketing Inc., a business development firm that specializes in the educational technology market. Glen has over 25 years of experience helping companies efficiently and effectively sell and market technology products and services to K-12 and higher education buyers. For more information, please contact sts-info@agile-ed.com.

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