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Has Your Business A Risk Reversal Strategy?

The concept of Risk Reversal is simple – but it requires some boldness and guts. Basically, it means that YOU, the businessperson looking to close a sale and allow your prospects to take that final step, should identify the various reasons a potential customer would hesitate to buy. You then think of little things you can do to overcome those reasons.

The Risk Reversal is like a Guarantee – but way more powerful. It’s a guarantee on steroids. The Arnold Schwarzenegger of all guarantees. The kind a buyer cannot turn away from because the buyer has nothing to lose and everything to gain.

Before we go there…let’s look at the Basic Guarantee that 90% of online and offline merchants usually have. Let’s label this Level 1 on the Scale of Guarantees.

Level 1 – The Standard Guarantee

A standard guarantee offers buyers a 30 day period to return the product for a full refund. This type of guarantee is required by law in many countries.

It’s mediocre and your competition probably offers it too. Truly successful businesses always go beyond a Level 1 guarantee.

The next stop is Level 2.

Level 2 – The Extended Time Period Guarantee

A Level 2 guarantee will extend this 30 days period to 90 or more days.

Many sellers swear by the 90 day guarantee. By giving the customer a full 90 days to try your product you often lower the refund rate.

Here’s why:

Let’s say Mary buys a €90 set of aerobics DVDs from your online store with a 30 day guarantee. It takes 10 days to reach her. Mary now HAS to test the DVDs in the next 20 days to see if she likes them. But she finds herself too busy. All of a sudden she has 2 days left to return the product for a full refund. It’s still sitting on her shelf untouched – feeling the pressure, she returns it unopened.

But if Mary had been given more time to try out the product, there’s a good chance she would not have felt pressured and may have taken more time to test, play and fall in love with the product.

If you’re selling products online, you can often create significant increases in sales AND lower your refund rate just by extending your guarantee to 90 days.

But Level 2 is nowhere close to what a guarantee can do.

Now we step into the Zone of Risk Reversal.

A few years ago, a guy by the name of Nick got frustrated because he could never find the right kinds of shoes he liked in the local mall. Nick went home that day and got online hoping to browse through online shoe stores – but there were few of them set up at that time in 1999.

Nick wondered if he could establish his own online shoe store. The idea kept jumping around in his head and eventually he quit his day job and founded Zappos.com.

At first people told him he was crazy. Shoes are something you need to hold in your hand before buying. You need to try them on. Feel the leather. Have your spouse see them on you and let you know what they think. There were a multitude of reasons to NOT buy shoes online.

Yet Zappos thrived. In 2005, the 6 year old company did $370 million in shoe sales!

How?

Well let me tell you what gets most people hooked on Zappos. Sure, Zappos had a wider variety than a traditional shoe store. But it was Zappos Risk Reversal policy that really makes most prospects into loyal customers. Here’s the decision making process prospects go through before buying their first pair of Kenneth Coles on Zappos.

• What if I don’t like that shade of brown? Can I return it? Zappos’ answer was yes.
• If I try it on and find it won’t fit – can I return it and get another pair? Their answer: yes.
• Will you pay for the shipping – and the cost of return shipping? Their answer was again: yes!
• If I buy it and then randomly change my mind – can I still send it back and get my dough back. Again – the answer was yes.
• If I bought it and then found one for a cheaper price on Canal Street, can I send it back? Again – yes.

They had an answer for every SINGLE doubt their prospects had. They were prepared to lose a little on return shipping because they were smart enough to understand that once their prospects bought the shoes – they would probably really like them and want to keep them. They knew their prices were good and they knew that once they got them hooked, they would be willing to tell their friends about them.

They were willing to bend over backwards to give their prospects the best service possible and eliminate every single doubt from their mind. No physical shoe store I know would place that much trust in a customer.

Zappos had effectively reversed every single doubt prospects could have in their mind. They made it a no-brainer to be their customer.

That my friend – is risk reversal.

My point is – Guarantee’s are fine – but they’ll only get you so far. Risk Reversal on the other hand – will make you millions and make your competition tremble in their boots.

This is where we come to Guarantees that effectively Reverse the Buyer’s Risk and make it a no-brainer to purchase from you.

Once you go beyond Level 1 and 2 – there are 4 more levels of Guarantees that fall in the Risk-Reversal Zone.

Level 3 – The Try and Then Buy Guarantee

This type of guarantee allows the buyer to pay only AFTER 30 days. The buyer pays nothing upfront or pays a small amount like €1 and knows that he will be billed later unless he cancels.

This is how this type of guarantee works. You allow the buyer to make a purchase for a mere €1 – €3.

They get to play around with the product for 30 days. At the end of 30 days, unless they cancel, they authorize you to bill them the balance owed.

Level 4 – Guaranteed Results or a Full Refund

Stronger still is the “Pay only if it works guarantee”. You guarantee a certain amount of results, say a 5 times boost in profits and allow the customer to claim a refund if this goal is not met.

This guarantee is not only fair to the customer – it helps close sales because you’re painting a positive picture in the customer’s mind of what your product can do for them.

Level 5 – Customer Always Wins

Next is the “Customer ALWAYS Wins” Guarantee. This is where the customer can return the main product for a full refund but can still keep the accompanying bonus gifts.

Let’s say you sell energy-efficient lighting. As a bonus on sales over €50 you offer the customer a free energy-efficient bulb worth €15. (Of course the bulb would have cost you only €5 wholesale, but the value to the customer is €15).

You allow the customer to return the lighting within 60 days if it doesn’t please them. And they can still keep the bulb as a thank you for trying out your store. So the customer wins – either way. That can be very reassuring.

Now you may worry – couldn’t people take advantage of your generosity?

The answer is yes – they could. But you’ll find that very, very few would actually do so. Most people are fundamentally good. When using this type of guarantee you will find that less that 0.5% of buyers attempt to misuse the system.

But so what if you lose €5 a few times due to a few unethical buyers. The increase in sales you get will more than make up for this. This guarantee and risk reversal policy works well because of the psychological image it sets up in the buyers mind.

Simply put: the buyer can’t possible lose. Even if they make the purchase and then have to return the light fixtures, they still end up with a free bulb.

The customer always wins!

That’s powerful risk reversal at work.

Now Level 5 is where many of the BEST stores stop.

But there is one more level you can use.

Level 6 – The Platinum Guarantee

This is where you offer the customer a double your money back guarantee.

It requires some boldness and you better have an excellent product! If you do – this guarantee can work miracles.

Here’s an example:

“If you implement at least 5 tactics from this book and haven’t seen a boost in revenue that puts a smile on your face, makes you more excited about starting your day each morning and deposits more money in your bank account – we will not only issue you a full refund – we will issue you TWICE your money back. We’ll pay you the cost of the book times 2. That’s €70. It’s the least we can do as a thank you for placing your trust in our business.“

Now that’s a guarantee. With risk reversal strategies like this, you will see your sales soar.

If you’d like to see further examples or a script used to create an overnight 50% boost in sales for their book please just let me know-brendan@peakperformancecoaching.ie

To Your Success.

How to Strengthen Your Marketing Message?

Checkpoint:

• You know who your target market is, what their needs are, what their purchase behaviors are and how to reach them.
• You know how to use market research to find out more information about your market on a regular basis.

Let’s look at writing targeted messages for your target market.

The strength of your marketing message lies in its ability to speak to the specific wants and desires of your target market, and tap into their emotional reactions, or hot buttons.

When you push those hot buttons, you motivate your audience to take action. The more people you can motivate to take action, the more leads you’ll have in store and on the other end of the phone line.

A strong marketing message will make a huge difference in your lead generation strategies.

A marketing message is simply a statement or phrase that you use to communicate information about your business to others. A strong marketing message will do four things:

• Speak to the reader’s needs, wants or problems (hot buttons)
• Offer a solution, advantage or benefit
• Describe a point of difference
• Motivate the reader to take action

The key here is to motivate your target audience to do something after they read or hear the message. It needs to be strong enough to entice the audience to ask for more information, visit the website, pick up the phone or walk in the store.

You will put your marketing message on every piece of marketing material your business uses for lead generation, so it has to be powerful and consistent and speak to the group of people that you have identified as your ideal customers. Strengthening your marketing message has the potential to dramatically increase your lead generation before you even change your existing strategies.

Here are some examples of strong marketing messages that are used by successful businesses today.

Let’s get started with the process you can use to create a new marketing message for your business, or refine the marketing message you already have.

Work through the following questions to brainstorm and record the aspects of your business that you will communicate in your marketing message. Take your time, and be as detailed as possible.

1. Use all the information you gathered about your target market to figure out what your customer’s hot buttons are.

Write down who your customers are, and what their problems, desires and needs are.

Take some time to revisit the behavioral and psychographic information you gathered when researching your target market. This will give you an idea of what kind of emotional hot buttons you should focus on when creating your marketing message.

Hot buttons are emotional triggers that motivate your potential customers to take action. Some common hot buttons are: price, location, exclusivity, results, safety, timeliness, convenience and atmosphere.

2. Describe the value or benefit that your product or service offers your customers.

This is what your customers get when they spend money at your business – the answer to “what’s in it for me?” How do you solve their problems? How do you meet their needs, or fulfill their desires?

For example, maybe you’re a grocery store in the neighbourhood, and you offer the convenience of being just a short stroll away instead of a car ride.

When you’re thinking about this question, think about your product or service in the context of the benefits, results, or advantages customers receive, instead of the features you offer.

3. Think about the outcome of the value or solution that you provide.

Brainstorm what happens when your customers receive the value or benefit from your product or service, what happens? Are they thrilled? Relieved of worry? Do they have more time to spend with their families, or do they put dinner on the table faster?

This is kind of like the storytelling aspect of creating your marketing message. Paint a picture of how you will improve the lives of your customers, in one way or another.

4. What is your company’s point of difference? What makes you stand out from the competition?

Your point of difference – or uniqueness – is something you will want to strongly feature in your marketing message. It is the reason that the reader should choose your business instead of your competition.

For this step, do some research on your competition and see what kinds of marketing messages they are using. How strong are those messages? What benefits and results do they promise?

If you are having trouble figuring out what sets you apart from your competition, think about including an irresistible offer, or a strong guarantee to give yourself an edge. (See our previous blog on risk reversal strategies here)

5. What is the perception you would like others to have about your business?

How you wish your customers to perceive you will impact how you describe your offering in your marketing message, and the kind of language you will use. Revisit the vision you created, and write down some ideas about the image you want your business to project to the outside world.

For example, if your business is completely transforming its operations to become more environmentally sustainable, you will need to use different language and emphasize different features and benefits than you did before.

6. Based on the notes you wrote in response to the above questions, summarize the information into a paragraph of 4 to 5 sentences.

If you’ve got pages of notes, this may be a challenging part of the process, but that’s okay because it means you have a lot to work with. Take your time, and wade through your notes bit by bit.

You may want to start by writing 10 to 15 sentences, and then narrow those down to 4 to 5 sentences when you have a better idea of what specifically you want to focus on. Or, you could try writing three sentences for each question, and then working to synthesize from that point.

Keep in mind that the most effective marketing messages use strong, descriptive language that triggers emotional responses. Think about how you would describe your point of difference, or value-added service to a close friend, and write with that in mind.

7. Using descriptive language, synthesize your paragraph into a single sentence of 15 words or less.

This sentence will become your unique marketing message!

I know how challenging this part of the process can be, so to make it easier, I usually write a few different sentences that emphasize different things to give myself choices. For example, if you don’t know whether to feature your company’s commitment to unbelievable prices, or its guarantee of customer satisfaction, write one sentence each and compare which is stronger.

Aim to have two or three sentences that you’re happy with, and then test them out to see which is the most effective.

The only way to find out the strength of your marketing message is to test it. Don’t be afraid of making some mistakes – you need to get feedback!

Test your three draft marketing messages internally first.

Before you go out to the public with your drafts, test them on your friends, family, staff and colleagues first. Use their feedback constructively, but don’t be afraid to stand up for elements that you believe are effective or important.

Once you have gathered enough feedback, rework your draft messages and incorporate the suggestions you believe are valuable.

Incorporate feedback, and then test a few draft messages externally.

When you have refined your draft messages and incorporated staff and colleague feedback, you can start to test the messages out on your audience.

This doesn’t have to be complicated, or cost a lot of money. Simple tests using small-scale distributions will give you the information you need to choose which message is the most effective.

For example, place two or three ads in the local newspaper – one a week with a different message each time – and compare the number of leads each ad generates. Or, send out a small direct mail campaign, with the materials split into three groups – one for each message.

The message that generates the most leads is the strongest, and will be the one you choose to be your business’ unique marketing message.

Now that you’ve got a killer message, use it consistently on all of your marketing materials and in all of your campaigns.

Consistency and repetition are powerful persuasive tools to use to reinforce your message over time. Ensuring your marketing message appears on all documents related to your business will build your brand image and your company’s reputation.

Make a list of all marketing materials, stationery, signage and internal and external documentation that your customers and clients come in contact with. Then, incorporate your marketing message onto each of them.

Here’s a suggested list of materials to include:

• Website
• Advertisements
• Direct Mail
• Listings
• Phone Messages
• Email Signature
• Business Cards
• Letterhead

Now that you know what you’re going to say, and who you’re going to say it to, next is to dive into some lead generation strategies.

To Your Success