The True Purpose of Heineken Light's New Money-Back Guarantee
Heineken Light just introduced quite an impressive-sounding guarantee, in which customers will get their money back if they think that it's not the best-tasting light beer on the market.
The new guarantee is being promoted with a couple of commercials featuring Neil Patrick Harris. The humor in the one 15-second spot embedded below stems from the fact that Harris isn't quite sure how anyone would actually get a refund.
"Not me, I won't" give you your money back, the actor and Oscars host says in the commercial. "Someone will give you your…" he stammers and then stops, before clarifying, "someone at Heineken, I'm guessing," while looking around bewildered. In other words, he has no clue how the money-back guarantee would work in real life. Ha!
If you're interested, have a look at the ad yourself:
https://www.youtube.com/watch?v=DN0vqqg-JBQ&feature=youtu.be
What's funny in a different way about this commercial is that the ad brings to light how virtually no consumers understand the nitty-gritty of money-back guarantees—mainly because almost no one ever gets their money back from them.
It's easy for Heineken to make this promise concerning its product, because people simply "won’t return the beer -- too much hassle and humiliation," Kit Yarrow, consumer psychologist and frequent Money.com contributor explained via email. "The whole point of the ad is to make a big statement about quality/taste -- guarantees are one of the strongest possible ways to demonstrate confidence. Heineken cleverly reduced the 'huckster' quality of a money-back guarantee by adding a dribble of irony and self-mockery through Neil Patrick Harris’ delivery."
Money-back guarantees have been around for decades. An old Journal of Retailing study succinctly sums up a few of the key reasons why stores and manufacturers roll them out, especially when it comes to newer, higher-end products:
Such a guarantee may increase a retailer's profits. They may increase the sales volume by encouraging shoppers to try new products. In addition, they may allow the retailer to charge higher prices because the reduction in risk from the product's being a poor match with their tastes may increase a consumer's willingness to pay.
Overall, these guarantees tend to provide far more benefit to retailers than they do for consumers. They're the "commercial equivalent of a date pulling out his or her wallet with no intention of paying," as a colleague at Time.com once put it.
It's not just retailers and product manufacturers that make use of money-back guarantees as a means to instill confidence and drum up business. A small Canadian newspaper just introduced a money-back guarantee for subscribers, while a pastor in Pennsylvania recently told his congregation that he'd be happy to give donations to the church back to anyone who doesn't feel blessed.
"We've never had one person ask for their money back, which means that God is true to his word and that we're seeing the blessings of God being poured out in people's lives,” said the pastor, Robbie McLaughlin of Hope City Church in Harrisburg.
It's hard to say how many people take companies up on their money-back guarantees because this information is rarely shared with the public, if it's tracked at all. Walmart introduced a much-heralded fresh produce money-back guarantee in 2013. But as one retail insider noted, it's somewhat of an empty promise, because the likelihood of anyone employing the guarantee for a refund is small: "How many customers are going to return to Walmart and stand in a customer service line to return a $3 produce item?"
Some money-back guarantees come with substantial fine print, as well as loopholes that can make it extra difficult to get your money back. For instance, a MousePrint.org study on the money-back guarantees highlighted how Federal Express's promise was undercut by a line of fine print explaining the "guarantee can be suspended, modified or revoked at our sole discretion without prior notice to you."
One of the best-known money-back guarantees comes from Hampton Hotels, which has had such a guarantee for more than a quarter-century, and which claims to have given away "millions of dollars in free room nights" over the years to guests who weren't fully satisfied with their stays. Even with those refunds factored in, the company says the guarantee has been great for business. One reason is that most people with complaints "merely wanted the management to know about the problems," according to a company press release celebrating the guarantee's 25th anniversary, and they didn't actually ask for their money back. Most importantly, the guarantee has served as "key driver of incremental business for the brand, with about 75 percent of all hotel guests aware of the offer and about half reporting that it has some influence on their hotel choice."