Price protection guarantees ensure that if a customer finds the same item cheaper elsewhere, the original seller will match the price. This provides an incentive for customer loyalty, but retailers must guard against fraud. Online retailers have different sales models, and time restrictions and conditions apply.
A price protection guarantee extends assurances 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 suppliers advertise an even greater offer, such as a “115% Price Protection Guarantee”, indicating that they will refund the difference plus 15% to offer the customer an even deeper discount. A time restriction of 30 days is typical and other conditions apply which may vary between retailers.
A price protection guarantee provides a powerful incentive for online customer loyalty in an economic model that allows for easy comparative shopping and highly competitive pricing. Even before a customer buys an item, he or she can use the warranty to ask a supplier to match a lower price.
In general, consumers tend towards brand and supplier loyalty when the brand or supplier provides good service and a positive transaction history. Some of the things that keep customers coming back to a supplier are fast shipping at reasonable 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 greater that the consumer will be a loyal (repeat) customer. Rather than buying an item found cheaper elsewhere, the customer is more likely to refund the price to the supplier.
While competitive pricing is one of the biggest reasons consumers spread their dollars across retailers, there are many advantages to buying from the same vendor over and over again. Repeat purchases are easier and faster for the consumer: in most cases, the customer has an established account with the credit card number and shipping information already registered. 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 previous 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 guard against fraud to continue offering these programs. Some of the conditions that normally apply to a price protection guarantee program are that claims of a lower price must be easily verifiable by the supplier; the product must be in stock at the advertised price; and the product must be in a new (unopened) condition. Model numbers must match exactly, and other factors and conditions may also apply. Carefully read each vendor’s policy.
Many real world retailers also offer similar warranty programs applicable to other real world retailers. In other words, they 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 those in the real world.
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. Find the best price for your item and take it back to your chosen supplier. If you prefer, look at the item’s best price within the next 30 days to take full advantage of your price protection guarantee.
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