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The guarantee is a time-tested marketing tool. A strong guarantee on your product or service can overcome the fears and doubts of most any wary customer. Though giving money back is the last thing any business wants to do, a compelling guarantee will increase your sales by more than enough to cover the sporadic refund request.

The more outrageous your guarantee sounds, the better the response from customers. Don't, of course, make any promises you aren't willing to fulfill, but it's often possible to guarantee more than you initially think is reasonable if you stand behind your product or service. Instead of promising customers their money back if they're not satisfied, promise to double their money. Instead of offering a free trial period, offer them a free gift or a gift certificate if they try your product and still decide to go with your competitor. Instead of a 30-day money-back guarantee, offer a one-year guarantee. Counter-intuitive as it may sound, the longer the guarantee, the fewer returns you'll get. It's a proven fact.

When customers do return your product or are unhappy with your service and request a refund, always fulfill your promise quickly and with a smile. Try to find out exactly why they're unhappy and what you can do to retain their business. Do this and you stand a good chance of turning an unsatisfied customer into loyal regular. Leaving a customer with a good feeling about you, a feeling of being taken care of, can be more beneficial to you than getting it right the first time.

Guarantees should, however, be used cautiously. Never, ever make a guarantee you can't live up to. The Federal Trade Commission considers the word to mean that customers are unequivocally entitled to a complete refund if they're unsatisfied with your business. You can be fined or even prosecuted if you make a false guarantee.