How Overpromising Can Harm Your Business

By in LiveChat Blog > Ecommerce,
avoid overpromising

When George H. W. Bush gave a speech on the 1988 Republican National Convention, it was a famous “no new taxes” promise that helped him win the election.

And what happened 2 years later? He did increase taxes when the country faced a recession in 1990.

Breaking this promise was one of the reasons why he lost a reelection bid.

Keeping promises is a base for building trust, both in personal and business relations. And trust is something your company wants to create and keep. There is a simple reason: people won’t buy in your shop or order your services if they don’t trust you.

According to research, 60% of respondents quit shopping because of missing trust logos. This is why we put testimonials of satisfied customers on your websites, highlight SSL certificates and badges or show off your sky-high ratings from websites like Trustpilot.

Breaking a promise given to customers can ruin years of building credibility, especially in high season. And Christmas is a high season for e-commerce with no doubt.

Shops compete with each other who will promise more, just like politicians before elections.

One of the competitors promises free delivery. So do you. Guaranteed delivery before Christmas? Of course.

What could possibly go wrong?

You might underestimate demand and capacity of yours and your suppliers. Then it turns out that you can’t keep the promise, you let people down and you can even ruin their Christmas.

You’re the same as politicians who don’t keep their promises, but they have one strong advantage over you – people don’t really have a choice and usually vote for them again (George H. W. Bush seems to be a rare exception).

When it comes to shopping online, customers have hundreds of options and will probably choose one of your competitors instead of you, even if it means slightly higher prices or looking for a new shop. In fact, the bigger your company is, the bigger public outrage might occur if you don’t keep promises.

I’ll show you a few examples of companies that promised too much and didn’t manage to fulfill promises.

1. Don’t bite off more than you can chew

A long time ago (exactly 16 years ago) online shopping was much less popular than it’s now (0.6% of total retail sales in 1999 v 7% in 2015). Toys “R” Us decided to organize a special offer for Christmas to develop their online presence and build a competitive advantage over competitors.

They guaranteed delivery before Christmas.

As you probably expect, they failed to fulfill this promise. The company underestimated demand and the capacity of courier companies.

As a result, thousands of customers didn’t receive their gifts before the Christmas Eve. What made the situation even worse was the kind of products that the company sells – toys. Surprising your kids with giving them nothing for Christmas doesn’t sound like a plan for perfect Christmas.

The company received tons of negative press and even a hefty fine of $350000 imposed by the Federal Trade Commission. The lesson was so harsh the company decided to completely reorganize its online presence and delivery of products by developing a partnership with Amazon to avoid similar mistakes in the future.

2. Predict the unpredictable

Retailers often blame couriers for delays in delivery. Sometimes that’s just their line of defense to cover their mistakes, sometimes they are right. The second case is perhaps less frequent, but more spectacular when it happens. Mentioned Toys “R” Us is just one retailer, even though a big one.

What can happen when thousands of retailers can’t keep their promises due to problems with the delivery services?

avoid overpromising

No one can tell you more about that than UPS. The company seemed to be well-prepared for Christmas 2013 with 23 additional planes leased and 55000 part-time workers employed. UPS did that to keep its promise to deliver gifts in the promised delivery windows.

It turned out to be not enough to meet the demand and the company failed to keep the promise.

What went wrong?

Orders exceeded forecasts and the company was not able to handle the demand. On the top of that, bad weather across the US caused delays of flights. The company didn’t manage to deliver thousands of packs before the Christmas Eve and sparked outrage.

Amazon, the biggest online retailer, was hit the hardest by their problems. UPS then offered refunds to affected people, but the image persisted.

The failure of UPS to deliver products before Christmas became a popular topic. You can easily find articles entitled “How UPS ruined my Christmas” or alike. They won’t disappear and will be constantly impacting the image of the company.

3. Flexibility over forecasts

Electronic goods consist of hundreds of small parts. Many of them are produced by different companies in different parts of the world. It increases the efficiency, but also creates a risk: managing a complicated supply chain is not easy and you can forget about flexibility. You have to order parts months in advance to meet forecast demand.

In 1995, Apple faced the problem of under forecasting and not being able to meet the demand for Power Macs. Result? Thousands of dissatisfied potential customers who were unable to buy desired gifts, lost millions in potential revenue and replacement the CEO.

However, there’s also a positive side, which shows that learning from failures can sometimes really help a company. After this failure, Apple decided to change the way its supply chains worked and the way they organized their logistics to cut inventory and be more flexible. It was one of the steps that led Apple to be one of the most valuable companies in the world.

How to avoid overpromising

As you can see, overpromising is a real problem, even for big and experienced companies. You must find the golden mean – promises attract people to your shop and convince them to buy, but promising too much can destroy your business in the long term.

What can save you is being agile.

Hundreds of people place orders counting on your guaranteed delivery and you know the delivery company might not manage?

Then stop this offer and provide another kind of incentive. To maximize satisfaction of visitors, you can run a quick survey with Survicate or similar tool and ask which incentive they prefer. Sure, some people won’t like the change, but it’s still a better solution that letting them down later.

Cover photo courtesy of David Hume Kennerly via Wikimedia Commons.
UPS photo via Reuters.

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