Guarantees discourage “corner cutting”

Sent by Jonathan Stark on March 12th, 2017

It’s true that value pricing aligns the financial interests of both the buyer and seller (i.e., both parties want the job done ASAP)

BUT!

The financial incentives of the buyer and seller are not the same financial incentives.

Allow me to explain:

Imagine that Bob is building a website for Alice. 

Both of these incentives are financial, but they ARE NOT THE SAME. 

Here’s where guarantees come in...

If Bob DOESN’T guarantee the quality of his work in some way, he is financially incentivized to do the least amount of work possible to meet his contractual obligations.

In other words, he’s going to cut corners all over the place. 

If Bob DOES guarantee the quality of his work, he is financially incentivized to satisfy Alice as quickly as possible. 

In other words, he’s stuck working on the project until Alice is happy. 

See the difference?

When you stand behind your work with a guarantee, you find yourself focusing more and more on learning how to satisfy the client quickly rather than how to fulfill your contractual obligations.

This changes almost everything about the marketing, sales, and delivery of a project.

To continue the Alice/Bob example:

If Bob knows that he has to work until Alice is satisfied, he’s going to make damn sure he knows how to satisfy her before he agrees to do the project at all.

(BTW - that’s what the Why Conversation is designed to do)

Questions? Just hit reply :-)

Yours, 

—J


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