Risk Reversal Marketing: A Strategy to Boost Sales and Build Trust

Risk reversal marketing puts you in the hot seat, rather than your customer. It’s a very effective marketing strategy because you remove all the risk of making a purchase. And risk is often what keeps a potential consumer from hitting the “buy” button.

Whether there is actual risk (unsure if the product will solve their problem) or perceived risk (new experience with a seller or service provider), a customer is much more likely to say “yes” to you if they feel there is a robust guarantee of their satisfaction. In fact, they’re often willing to pay a higher price for that peace of mind.

Risk reversal is probably one of the most powerful tools in your marketing toolbox. It can greatly increase sales, without a great burden on your bottom line. Whatever costs you incur in executing your strategy, they are more than compensated for with increased revenue.

What is a Risk Reversal Strategy.

Risk is essentially a fear of the unknown. Risk reversal strategy seeks to eliminate fear by proactively overcoming all the objections that hold buyers back from a sale.  

Some of the most obvious ways of doing this are monetary. For instance, let’s say you’re an online seller. A potential customer thinks your shoe insoles will be the perfect solution for their aching feet, but they’ve been down this road before. 

The insole may not fit in their shoe properly or hit their arch in the right spot, so they can’t be sure. If there is a cost to return the product, they will likely look for something that’s a safer bet—perhaps buying from a brick-and-mortar store where they can try the product on. 

However, if you are covering the cost of return shipping, they can enjoy the convenience of online shopping without worrying about losing money on the deal should it not work out.

You could take this a step further and offer a lenient time period for returns. Some businesses give the customer a year to make a return. This may be too extreme for your product or business, but it makes an important point. Often, the longer the grace period you give a customer, the less likely they are to return the item. The lack of urgency works in your favor.

Another reversal strategy that can serve to reduce risk is identifying people who are not suitable for the product or service. For instance, if you’ve designed a heavy-duty bicycle for the rigors of deep woods trails, you might want to put the urban biker on notice— “If you’re looking for a bike to make a trip to the weekly farmer’s market or for family trips around city park, our bikes are not for you.” 

By telling the market who the product is not for, the customer who does fit the parameters will feel more confident this is the right solution for them.

Though not a reversal technique, social proof is a tactic that can be used in tandem with the above to also reduce fear. If you are an unknown to the customer, things like reviews, testimonials, customer-provided images, and trust badges on your web pages, all go toward helping the consumer feel more comfortable with you.

Why Is It Called Risk Reversal?

It’s called risk reversal because instead of the customer assuming all the risk when they make a purchase, the seller is assuming the risk. Often, they not only guarantee to make it right for the customer, but they may also add in a little something extra for the trouble. That way, the seller has something to lose too. “Skin in the game,” gives you more credibility with the customer.

After all, they reason, you wouldn’t offer such a robust guarantee if you weren’t confident you could deliver on your promises.

Why You Should Include Risk Reversal in Your Marketing.

Risk reversal helps your customer overcome one of the biggest barriers to making a purchase—fear of the unknown. Will you be as reliable as you say? Will the product fit? Will the quality be as good as the picture? How hard will it be to get satisfaction?

If you take these types of concerns off the table and assure the customer, they will be covered—no matter what—they will not feel as though they have anything to lose. So why not give the product a try? 

Removing the risk makes it easier to close the sale and often, it allows you to charge a higher price than your competitors.  

You’ll also have higher customer service satisfaction, so you’ll get better reviews.     

Risk Reversal Differentiates You from Competitors.

Most businesses are boring businesses.  By that, we mean businesses that offer needed, but mundane products or services. Try googling, “plumbers near me” and see just how many there are in your area. With so many to choose from, how does a business stand out in a crowded field?  Risk reversal.

Even if your business is pretty basic, the customer sees risk in doing business with you. If you can move the burden of that perceived risk from them to you, you suddenly stand out as a good prospect.

Risk Reversal Adds Value to Your Offer.

By removing the risk, your product or service automatically has a higher value.  Let’s look at the plumber example.  

Suppose a plumber offers a two-year “double your money-back” guarantee if any of their work fails.  You can be pretty confident your toilet is not going to have a problem in the next two years if they’re offering that guarantee, but if it does, you’ll get it fixed and double your money back.  

Would you pay more for this service knowing that they’re so confident in their work that they’ll pay you back twice what you paid if it fails?  How much more?  Perhaps an extra 10%?  Or maybe more? In fact, many consumers make the choice to pay a little more to get peace of mind.

Types of Risk Reversals.

There are many types of risk reversal guarantees, limited only by your imagination.  To inspire you, we’ve compiled a list of some of the most common types:

  • Money-Back Guarantee
  • Double Your Money-Back Guarantee
  • Free Trial
  • Free Sample
  • Free Return Shipping

Example of Product Risk Reversal.

Our company sells an outdoor product, which has some components made of glass.  Customers may be concerned that the glass will get broken, leaving them with a product that is no longer usable.  

In response, we created a “protection plan” which covers them against broken glass forever.  If, for any reason, the glass breaks (no matter whose fault), we’ll send them a free replacement piece.  The only thing we ask of them is to cover the shipping cost (actual cost, not inflated).  

With this risk reversal strategy, we’re not only acknowledging a potential fear up front, but we’re also differentiating our business from our competitors by proactively offering a solution.  The actual cost of this plan is very low for us. There likely won’t be many replacement pieces we need to send, and the shipping will be covered by the customer.  

Not only do we have the opportunity to stand out in this product category, but the customer is willing to pay a higher price for our product knowing they’re protected against breakage for life.

Example of Service Risk Reversal.

With a service-based business, risk reversal is quite easy.  For example, a lawn care business in my area offers to revisit and fix things free of charge, if you aren’t fully satisfied with the service you received. 

The guarantee from their website:

“However, we realize that the lawn pros are human and will sometimes make mistakes. That’s why we are proud to offer our total satisfaction guarantee. What this means is that if you aren’t fully satisfied with the service you received, just let us know within 24 hours and your lawn pro will be happy to come back and fix things, free of charge.  This guarantee doesn’t end with your first lawn care service either. We’ll follow up with you after each and every service to ensure that your lawn is getting the best care possible!”

Risk Reversal in Copywriting.

Copywriting is key to an effective risk reversal strategy.  Your copy must clearly define what the risk is and how the customer is protected from that risk. The use of creative copywriting will help your customer see themselves in that risky situation and then feel the relief of having it move to the seller.

What is Your Risk Reversal Policy?

Now that you know a lot more about risk reversal, it’s time to develop a risk reversal policy for your business.  No matter what business you’re in, there is likely some type of risk reversal strategy you can implement to differentiate yourself from competitors.  

Whether you’re selling something as boring as paper or an exciting new high-tech gadget, consider risk reversal marketing for your business.