LIFETIME GUARANTEE: VALUE OR GIMMICK?
by Vivian Marino
Companies vary on how they interpret this promise on goods and service.
Chris Zane was just another struggling entrepreneur, peddling bicycles and cycling equipment in a 900-square-foot shop near the college town of New Haven, Conn., where bike stores are as common as bookstores.
Today he outpaces the pack. In little more than a decade, Zane's Cycles was transformed into one of the largest independent bicycle dealers in the state, selling about 2,500 bikes a year from a sprawling 7,500-square-foot store. Sales increase on average 25 percent a year.
Zane's secret? He offers a lifetime guarantee on all merchandise - even items bought before the policy was instituted in 1987.
"We give free lifetime service, like tuneups, gear adjustments..." Zane said. He attributes his expansion largely to the extraordinary guarantee, which he vows to follow rigorously as long as his business remains alive. "Our customers know that if there's a problem with anything, they can bring it back. That has brought many people to our store."
The lifetime guarantee is one of the business world's most enticing marketing tools. It's also among the most convoluted. Many products, from pens, to tools, to camping equipment, to bikes, are said to be good for a lifetime. But the question is: Whose lifetime? The product's? The company's? Yours? Your kids'? Their kids'? That's sometimes open to interpretation.
Some lifetime guarantees are mere hype or contain fine-print caveats, and others are voided after the company goes belly-up or merges with another business.
But many offers have withstood the test of time, with companies taking pains to make good on their pledge for continued customer satisfaction and loyalty, realizing it gives them a distinct competitive edge.
"They've made a household name for themselves in part by standing behind the merchandise they sell no matter what - in effect, forever," said Leonard Berry, director of the Texas A&M University Center for Retailing Studies in College Station, Texas, and author of On Great Service.
" Usually, as long as the product hasn't disintegrated, the guarantee is still alive." "That's the position typically taken by several household name companies, many of whom undoubtedly can attribute their good fortune and longevity to their good service and staunch product guarantees. Sears Roebuck and Co., has carried a lifetime warranty on its popular Craftsman tool line ever since it began selling them in 1927. As a result, sales have grown rapidly over the years - 1 billion hand tools sold to date.
Catalog giant L.L Bean also covers all products past and present, from camping gear purchased in the '20s to boots in the '90s. It says it has, from time to time, handled returns from merchandise purchased decades ago. "Of course, we may ask what it was that was unsatisfactory after 70 years," said Catharine Hartnett, a spokesperson for the Freeport, Maine company. "We take every item case by case."
"We have never actually used the term 'lifetime guarantee,' but we do say '100 percent satisfaction guarantee.' We let our customers determine what the satisfaction is," she said.
Although some companies put time limits on their warranties - typically one to three years - others leave it up to customers to determine how long a product should last.
Norm Thompson, a Portland Ore., retailer, has a trademarked "You Be The Judge" guarantee. "If you're disappointed in any item, at any time, return it," it repeatedly tells customers in its catalog of clothing and household goods. "No fine print. No excuses."
Although the products have a decidedly shorter lifespan, Leonards's Dairy of Norwalk, Conn., has two rules for ensuring satisfaction about anything anyone ever buys:
"1) The customer is always right. 2) If the customer is wrong, refer to rule 1." Similiar unconditional guarantees are offered by Cross pens, Zippo lighters, Fuller brushes and Midas mufflers, to name a few. Lego Systems has one of the most generous, though not well-publicized policies: If there's a problem with a toy part, even if it is lost, it sends out a replacement.
Unfortunately, consumer advocates say, there are many more of the companies that fail to live up to their promises. Better Business Bureau offices and consumer groups across the country hear tales of broken promises about products and services.
That's why they urge consumers to read all the fine print before making any purchases and to deal only with reputable companies with proven track records.
If there is a problem, they should first voice their concerns with the retailer that sold them the item, then the manufacturer, if possible. If that fails, they should lodge a complaint with their state consumer protection office or the BBB.
"There are companies that...give in the big print and take away in the small print," said Berry. "They try to inflate the value or the appeal of a product. Puffery has always been a part of marketing. It's bad business."
Puffery can come in many forms: The struggling health club that charges a premium for a lifetime membership that lasts only until it goes out of business several months later. The auto repair shop that guarantees its mufflers or brakes, but not the more expensive labor or other parts that go with it. The computer paper company that offers a 400-year guarantee on paper actually designed to last only five years - a true story - and then leaves town abruptly.
"Many companies want to put the guarantee beacon without building a great organization," said Christopher Hart, a Brookline, Mass., marketing consultant and author of "Extraordinary Guarantees."
"If they've got the guts to do this, they've got the guts to do it right." Most companies are required under the Uniform Commercial Code to provide some level of guarantees for any tangible items they sell - that is, if the item is to be 100 percent wool, it better be.
But few organizations have the guts to go beyond industry standards, Hart says. He said about 4 percent of the companies he works with offer any extraordinary guarantees like lifetime warranties or big payouts. But studies show businesses that do go out of their way to please their customers often reap huge rewards for years to come. Automakers can count on bringing in $140,000 during a satisfied buyer's lifetime; appliance makers can expect $2,800 during 22 years and supermarkets get $22,000 from a family during a five-year period, Hart says.
Customer loyalty and future profits are what motivates Zane, the Connecticut bicycle dealer who guarantees everything he sells under normal usage. "We sometimes lose a little on some transactions, but we gain a lot in good will," Zane said.
He recalls the time a customer returned a pair of bicycle shorts because a pull had developed in the material. He exchanged them for another pair., then returned with the same problem. By the third trip, Zane finally figured out what was happening.
"We looked at the bike he was riding and noticed the pull was caused by a piece of Velcro used to keep a bag in place. We still gave him a third pair of shorts," he said. "Next week he was buying an expensive pump." Marketing experts say most businesses are reluctant to make such guarantees for fear they'll be abused. Surprisingly, very few people do misuse them, they say. Of the 2,500 bikes Zane usually sells a year, only a handful are returned, he says.
Neil Raphel, vice president of Raphel Marketing Inc. in Atlantic City, N.J., says his company has sold more than 100,000 business books and tapes in the last 10 years and has had only two or three items returned, although the products carry a satisfaction guarantee. There's nothing to stop customers from reading the books or listening to the tapes, then returning them when they're done, he said. "Consumers by and large are not going to abuse the guarantee. I think it's important for businesses to understand that," Raphel said. "Every sale is a two-way bargain."
Hartnett, of L.L Bean, agreed. "We feel that 99 percent of our customers are treating us the way we would think we're treating them." Seeing is believing for the 84-year-old company, though sometimes it's had to go by blind faith alone. Hartnett recalls the time about 10 years ago that a customer insisted on -and received- a refund for a defective novelty product without the merchandise in hand. The man had purchased a boomerang.