Let’s talk about the powerful concept of risk reversal. About a year ago, I had a client who offered his customers a rather standard “2 Week – 100% Satisfaction Guarantee” for his product.
In addition to a number of marketing strategies that we deployed, one of the first things we did was to enhance his product guarantee.
First we changed it to 30 days … then 60 days … then 365 days … then 365 days PLUS double your money back performance guarantee!
We tested many variables. (The key is to TEST each variable one at a time to determine what’s going to work best for you!).
And the more liberal we got with the guarantee, the BETTER his sales!!
In fact, it’s not uncommon for companies to DOUBLE or even TRIPLE their sales once they deploy the marketing strategy of ‘Risk Reversal’!
It’s one of the easiest strategies to test … and one of the fastest ways to grow your profits!
Let’s face it, your customer will make the decision of whether or not to buy from you based on two factors:
- The degree to which they believe that your product or service will solve their problem (and they will be better off for having worked with you) or,
- The level of risk (monetary, likelihood of getting a result, ease of use, level of satisfaction, etc.) associated with buying the product.
The first part of the equation has everything to do with your marketing, how well you articulate your message and your differentiation factor (otherwise known as your unique selling proposition).
The second part of the equation is directly correlated with your guarantee and your ability to REVERSE your customer’s risk.
If you can reduce or even totally eliminate their risk in doing business with you, then converting your prospect into a buyer is exponentially easier!
You make it easy for them to say ‘YES!’ to doing business with you and, like music to your ears, your sales will increase almost instantly!
3 Ways to Reduce Risk
- Money Back Guarantee: The most common form of this type of guarantee is the ever-so-popular “30-day money back guarantee.” Though, this is a good start (average at best), an even stronger guarantee would be a 45-day, 60-day, 90-day, 1-year or lifetime guarantee.In fact, the longer you extend the guarantee, chances are your sales will increase and your returns will decrease!For example: “If you invest in our program, we’ll give you a full 60-days to put it to the test. If you don’t feel that the marketing strategies you’ve learned in this course aren’t worth at least DOUBLE what you paid for it, than call my office and demand an immediate refund. We wouldn’t dream of keeping your money if it didn’t produce the results you were hoping for.”That’s more compelling than: “30 Day Satisfaction Guarantee.” Yes?
And, the stronger your guarantee is when compared to your competitors – the more you will dominate the market and make your competition completely irrelevant!
- Better Than Money Back Guarantee: This simply states that if you’re not completely satisfied with your purchase, not only will you get your money back – you’ll also be able to keep a bonus incentive just for trying it out.You may have seen this approach in infomercials – “It’s only 5 payments of $29.95 and you have a full 60 days to try it out. If this isn’t the best stain remover you’ve ever owned, send it back and you can keep the mini vacuum absolutely free!”Why do you think they make these types of offers? Because they work.And the increase in sales largely compensates for any customer that does take advantage of the guarantee (disclaimer: your product DOES have to work; otherwise, everyone is going to return it!)
You could offer any sort of free gift, special report, information, etc. Creativity wins this game.
- Emotional Guarantee: This works when it might not be practical to guarantee results with a money back gaurantee (like in the case of a medical professional, consultant, real estate agent, accountant or lawyer for example).In this case, you may want to consider giving them “results in advance” – such as a free initial assessment or free service audit.The whole point of the emotional guarantee is to reduce their fear in doing business with you and increase their confidence in you … making it easier for them to say “yes” when it comes time to pulling out their wallets.
The key to remember is that, though risk reversal can sound a little intimidating, experience and studies have shown time and time again that reducing or eliminating your clients risk WILL increase your sales significantly above and beyond any payout you might experience in refunds.
Most people are not looking to put the screws to business owners … they just want a fair and honest deal from people that they trust.
Take a sample of your prospects and test the risk reversal guarantee. How much did your sales increase?
Let us know what type of guarantees you can come up with and write them in the comment below.