Don’t get screwed by a lifetime guarantee

Mr. Product
Jul 20, 2017 · 5 min read

Lifetime guarantees aren’t always what they seem.

I’m noticing this a lot in the world of newer hardware companies, especially the crowdfunded startups. A lot of them are slapping fancy-sounding guarantees on their products, some making a lifetime promise.

I recommend not factoring this promise into your decision.

It’s a great bet for the companies. They get a sales boost from selling a product consumers have a little more confidence in. This could fuel their growth and help them become the kind of company that actually will be around and profitable 40 or 100 years from now — the kind of company that can actually honor its guarantees.

The problem is, a lot of these companies are going to fail. And their customers will be stuck having paid a premium for a worthless “guarantee.”

A guarantee helps ease consumers concerns over paying a higher price than they’d like to. Well, at least I won’t have to replace the thing.

Few of us bother with guarantees on cheap products. Buy an $11 blender at a box store and we expect to pay for replacing it down the road. We put off the lifetime cost of solving the job that product does. Spend $599 on a high-end blender, however, and consumers expect reassurance that they won’t have to pay for this product’s job ever again. This one purchase will pay for a lifetime of blending duties.

A guarantee helps ease consumers concerns over paying a higher price than they’d like to.

Brand reputation goes a long way here too. A brand that has decades of history building goodwill in the market makes it easier for consumers to judge the future reliability of the brand.

The fact is, a guarantee or warranty or “promise to stand behind our product” is only as good as the company behind it. If the company goes under, your guarantee is worthless. It’s a nice promise. But like any promise, you need to consider the trustworthiness of the source.

Credit check the business

Businesses do this to you all the time. It’s called a credit report. It’s the basis for evaluating the trustworthiness of consumers. Will this buyer make good on their promise to make their payments? If the promiser disappears or goes bankrupt, there’s little recourse the business has to fully recoup their losses.

All this being said, I’m really excited about guarantees/warrantees from the right source. Just like a bank would be excited to sell a mortgage to someone with an 800 credit score.

I’m really excited about guarantees/warrantees from the right source.

In evaluating a company’s “lifetime guarantee” potential, I use the same main factors FICO uses to build a credit score for people like you and me. I just give them a little twist and apply them to the business. Those main factors are: Length of credit history, payment history and credit utilization.

Length of credit history

Lenders want to know that a consumer has been in the credit game for a while and has a good track record. This is also the best way to mitigate risk when evaluating a companies “creditworthiness.”

Standout example: L.L. Bean

I don’t know what L. L. Bean’s executives are doing out there in Maine, but whatever it is it’s working. The company has weathered two world wars, the Great Depression, and every economic high and low ever since. Their legendary guarantee wasn’t just dreamt up and slapped on a landing page to goose sales. It was earned over more than 100 years.

Payment history

Obviously lenders like consumers who pay their bills. As a consumer, I like businesses who take their warranties seriously and make good on them. Guarantees are bullshit, I want to see a good record of you making good on your guarantee. That’s what counts.

Standout example: Nordstrom

The department store Nordstrom has a pretty storied return policy. The store has long accepted returns no matter how long has passed since purchase or if the buyer has a receipt. They have a strong history of making good on their guarantees.

Credit utilization

Lenders have an idea of what a healthy amount of debt is for a person to carry. Use too much or too little of your credit and you may pose a lending risk. As a consumer, I want to see a healthy amount of activity around a company’s guarantee, but not too much. If they make too many warranty replacements, I’ll wonder if there’s a bigger issue with the product. If they don’t make any, I’ll wonder if the guarantee is just for appearances.

Standout example: Darn Tough socks

One of the most famous guarantees of the 21st Century comes from the Darn Tough brand. Although the company doesn’t have the historical pedigree as an L.L. Bean (the Mill was actually founded in the 70s but didn’t launch the in-house Darn Tough brand until 2004) the guarantee is well received specifically because of it’s strong utilization record. Read customer reviews online and you’ll get a strong mix of stories from people who got a satisfactory return, along with those who have had the product well outlast their expectations.

Final thoughts

It’s important to remember that businesses assess risk when they hear promises from us. We should do the same when we hear promises from them. Don’t take guarantees as gospel.

In a perfect world, a good guarantee is never used. But in the world we live in, we use our products. A lot. No quality control can lab truly replicate the conditions of a lifetime of real world use. It’s our relationship with the manufacturer that helps work the kinks out. And when we find a kink, it’s good to have a producer that will stand behind us and make things right.

But that’s where the utility of a guarantee stops. When guarantees are tossed around by companies without the track record to back them up, I’m skeptical. Maybe they’ll become the next L.L. Bean. Good luck, I say. Find some other customer to help you get there.


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