What is a Price Protection Guarantee?

A price protection guarantee provides a powerful incentive to build customer loyalty online.

A price protection guarantee extends the guarantee to the consumer that when purchasing an item, if the customer finds the same item cheaper from another supplier, the original seller will match the price by refunding the difference to the buyer. Some vendors advertise an even bigger offer, such as a “115% price protection guarantee”, indicating that they will refund the difference plus 15% to give the customer an even greater discount. A 30-day time restriction is typical and other conditions apply, which may vary between retailers.

In general, consumers tend toward brand and supplier loyalty when the brand or supplier offers good service and a positive transaction history.

A price protection guarantee provides a powerful incentive to build online customer loyalty in a cost-effective model that allows for easy comparison shopping and highly competitive pricing. Even before a customer buys an item, he or she can use the guarantee to ask a supplier to match a lower price.

In general, consumers tend toward brand and supplier loyalty when the brand or supplier offers good service and a positive transaction history. Some of the things that keep consumers coming back to their supplier are fast shipping with reasonable shipping rates, generous return policies, and good customer service. If a consumer finds these factors present in a supplier that also offers a price protection guarantee, the chances are higher that the consumer is a loyal (recurring) customer. Rather than buying an item found cheaper elsewhere, the customer is more likely to return the price to the seller.

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While competitive pricing is one of the main reasons consumers spread their dollars among retailers, there are many advantages to buying repeatedly from the same supplier. Repeat purchases are easier and faster for the consumer: in most cases, the customer has an established account with a credit card number and shipping information already on file. Repeat purchases reduce privacy concerns: fewer vendors have personal information about the customer. Finally, repeat purchases are less stressful for the consumer: there is a positive history of past transactions. In many cases, this guarantee removes the only real incentive for a satisfied customer to go elsewhere.

While these programs are great for consumers, retailers must protect themselves from fraud in order to continue to offer such programs. Some of the conditions that typically apply to a price protection guarantee program are that claims of a lower price must be easily verifiable by the seller; the product must be in stock at the advertised price; and the product must be in new (unopened) condition. Model numbers must match exactly and other factors and conditions may also apply. Read each supplier’s policy carefully.

Many real-world retailers also offer similar warranty programs that apply to other real-world retailers. In other words, they will honor a lower price found at a competitor down the street or across town, but cannot extend the offer to lower prices found online. Online retailers have drastically different sales models that, in many cases, don’t require large teams or commercial construction contracts like their real-world counterparts.

The next time you buy an item, check to see if the supplier offers a price protection guarantee program. Be sure to check how long the warranty lasts and what conditions apply. Then find the best price for your item and take it back to the supplier of your choice. If desired, note the best price on the item within the next 30 days to make the most of your price protection guarantee.

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