Risk Reversal

Risk reversal is a strategy that transfers some, or all, of the risk of a transaction from the buyer to the seller. The seller agrees in advance to make things right if the purchaser doesn’t end up satisfied.

While this strategy may feel uncomfortable to you, remember that you – as the seller – can spread your risk among many customers. Your customer can’t do the same.

By eliminating the risk of purchase, you’ll close more sales and eventually make more money than what you’ll lose if some customers take advantage of your generosity.

Basically, your customer will make the decision of whether or not to buy from you based on two distinct factors:

1. 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.

2. The level of risk (price, effort, result, level of satisfaction, etc.) associated with buying your product.

The first part of the equation has everything to do with your marketing, how well you describe and position your product or service. It also depends on the qualities that separate you – and make you better – than your competitors (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 the risk in doing business with you, then converting your prospect into a buyer becomes much easier! Nothing beats: If you’re not satisfied, you pay nothing.

Risk reversal is one of the easiest strategies to test – and one of the fastest ways to increase your profits! Simple changes, such as extending the length of your guarantee, or refunding money unconditionally, can be tested in limited form.

After all, most people are not looking to cheat or take advantage of you – they just want a fair and honest deal from people that they trust.

Risk reversal can sound a little intimidating at first. But studies have shown that reducing or eliminating your clients’ risk WILL increase your sales significantly more than the expense you might incur in refunds.