Risk-Reversal’s Role Reversal

Guarantee that you will deliver on your promise

The greater portion of my career has been in copywriting, selling, and direct marketing. And one of the common denominators I’ve found in any successful piece of copy is the power of risk reversal.

That is, taking more of a risk from the sale than the purchaser of your product.

Risk reversal is a powerful method to increase sales by easing the buying decision and allaying fears consumers might have.

When people are considering an offer, and if the offer is “too good to be true,” they will invariably seek out more secure means to benefit from it. Otherwise, they will have a tendency to think, “What’s the catch?”

The greater the guarantee, the greater the sales. This has been consistent in almost every industry in which I’ve worked, and with every split-test I’ve conducted.

For example, a 30-day guarantee will outsell no guarantee. A 90-day guarantee will outsell a 30-day one. And so on and so forth.

However, there are some exceptions to this rule.

Sometimes, shorter or more creative guarantees can outperform longer ones.

Why? Perhaps this is because, in a promise-filled industry oversaturated with, and burned by, over-the-top hype, long, unrealistic guarantees make the offer suspect.

People might be left scratching their heads wondering if the guarantee is an attempt to pull the wool over their eyes.

Guarantees that are too strong (like one or even multiple years, lifetime, etc) can unconsciously convey that the product is so poor that either the purchaser will forget about the promise during the guarantee’s extended lifespan, or the seller is trying to build perceived value in areas other than the product itself to make up for the lack.

But length doesn’t always mean strength.

In other words, the strength of a guarantee is not limited to its timeframe.

Creative guarantees work extremely well, especially in an industry where people encounter typical money-back guarantees. These include guarantees that don’t necessarily have anything to do with refunds or money. By being different, a unique guarantee can provide a powerful twist to an offer.

Notwithstanding the legal requirements to offer a money-back guarantee, think of guarantees that include gifts, discounts, credits, vouchers, etc.

For example, just recently a friend of mine launched an intensive and pricey classroom-style training program, but with a very interesting angle. Whether you succeed or not, or whether you like the program or not, you get your money back.

It sold out in just a few hours.

Ultimately, guarantees exist because we fear making bad decisions.

And a purchase is a buying decision.

But remember that a guarantee’s job is not to remove fear. Not in a direct sense. It’s to increase the customer’s confidence that the product will do as promised.

In fact, in an article titled “The Great Customer Service Hoax,” the author, Belinda (who is also a copywriter), said it perfectly. “The simple truth about customer satisfaction,” the author writes, is this:

You might think that to maintain awesome levels of customer satisfaction you need to have outstanding products and services, diligent processes and reports and excellently trained staff who know when to make a decision that’s right for the customers. Well, you do need those things but the truth about consistently good customer satisfaction is much simpler.

Customers are satisfied when you met their expectations.

Guarantees help to communicate this important promise. A guarantee communicates not only that the product has value (e.g., “it’s so good, I guarantee it!”), but also that the product will meet their expectations.

A guarantee encourages sales and profits. (Sales is self-explanatory. But profits? Yes! Guarantees can also decrease refunds. I’ll come back to this in a moment.)

So objectively, add a guarantee that’s easy, strong, and reasonable (that is, it’s not far-fetched). If it has the appearance of being too long or unbelievable, either reduce it or add copy to justify your attempt.

Just like the power of “reasons-why” advertising, don’t forget to back it up. Provide a logical, commonsensical explanation behind your guarantee to justify why it’s so strong. The more you do, the more believable your guarantee will be. Otherwise, an overzealous guarantee will make it questionable.

(For example, with a “lifetime guarantee,” people will often ask, “Whose lifetime?”)

But in the majority of cases, if you failt to offer a guarantee let alone a strong one, you’re losing a great percentage of potential sales.

In addition to communicating value of and confidence in a product, a guarantee can also become a powerful positioning tool.

Take for instance the story of the Monaghan brothers. The two ran a small business in order to pay their way through college. While one worked the day shift in order to attend school at night, the other did the converse.

After about a year in the money-losing venture, one of the brothers sold his share of the business for a beat-up old car. The other, however, with a good dose of stick-to-it-iveness, decided to make something of his fledgling pizzeria.

According to some interviews he recently gave, Tom Monaghan said that, at the time, he wasn’t quite sure that his decision to put a guarantee on his pizza delivery would change much. But obviously, history tells us that his decision was a good one.

By simply marketing the strength of a guarantee (i.e., “Pizza delivered fresh in 30 minutes or it’s free”), Domino’s Pizza became the multimillion-dollar franchise operation we know today.

Online, strong guarantees are more than just sales tools.

The Internet has opened many doors, including those to many unscrupulous entrepreneurs. Scams and snake oils are rampant online. Millions (if not billions) of dollars are lost to these scamsters each month.

The Internet is rife with fraudulent offers, phishing attempts, and shoddy products. Even laws and anti-scam tools won’t stop crafty entrepreneurs who are determined to bypass the systems to scam the unsuspecting.

So people are understandably leery, skeptical, distrusting, and cautious.

Obviously, the use of testimonials, demos and tours, statistics, laboratory tests, clinical trials, case studies, free trials and samples, real pictures of the product in question, and so on are all incredibly important.

But in addition to these methods and elements of proof you can and should add to your copy, strong and creative guarantees are equally powerful proof elements and probably some of the most underutilized.

Why? Mostly because business owners are leery themselves of adding, extending, or creating guarantees because they fear the onslaught of losses from returns.

If the product is mediocre, then this fear is sadly justified. But most products are good. (Granted, there are just as many fraudulent consumers out there as there are scams. Businesses fear them equally as consumers fear buying from fraudsters.)

But generally, guarantees will increase sales.

Chris Ayers, former publisher of Unlimited Traffic!, gives an astonishing real-life example. Writes Ayers:

“One of my first direct mail products years ago was a self-study program. When I first offered the program in a magazine, my sales weren’t even enough to cover the cost of the ad. I changed my ad and sales letter to include a guarantee. The number of responses to the same ad increased by a factor of 20 and my conversion rate from my sales letter rose from 10% to almost 40%.”

Remember that adding a guarantee might increase returns and refunds. But try it and do the math. In some cases, a small increase in refunds might be greatly overshadowed by a disproportionately larger increase in sales.

For example, in one test I’ve conducted with a consulting client, we raised the guarantee from a 30-day guarantee to a 6-month, double guarantee.

(The “double” included a 100%-money-back guarantee within six months, and a double-your-money-back within the first 30 days.)

The result? During the test, there were no refunds within the initial 30 days. But refunds within the first six months increased from about 4% to 6.5%.

Of course, that’s significant.

But look at the increase in sales…

Sales conversion went from a little less than 3% to 7%. Mathematically, it means refunds increased by 62.5%, while sales increased by over 133% (i.e., twice as many more sales as the increase in refunds).

The lesson is this: while a guarantee might increase refunds, the increase will be negligible when contrasted by the more significant increase in sales.

This is true in the majority of cases. But in other cases, net profits can increase quite substantially. Even more than the norm.

Why? Because, unbeknownst to many marketers, one of the most important benefits of using a guarantee is the fact that it can actually reduce returns.

If you have a professionally-looking website, an ethical sales approach, and a proven product or service, the lack of a strong guarantee will still, particularly on the Internet, cause most prospects to perceive your offer as questionable in the very least.

But adding a guarantee — particularly a strong one — not only increases sales because it removes the risk from the buyer’s mind, but it also increases perceived value and therefore overall confidence in the product and the seller as well.

Guarantees also grant you an almost instant credibility with potential customers.

And finally, strong guarantees also help to raise tolerance levels.

Customers are more apt to ignore or even accept a few flaws, thereby reducing the need to return the product at the slightest imperfection.

This is because they feel they are in good hands, whether they know this experientially or not. The confidence level that the guarantee created acts as some sort of psychic security net.

In other words, a guarantee not only reduces the skepticism around a purchase, but also contributes to what psychologists refer to as “The Halo Effect.”

Ultimately, add a strong guarantee to your offer. But don’t stop with just at increasing its timeframe. Be creative with your guarantee.

Think about multiple-money-back guarantees, add-on guarantees, gift certificates, credit or discount vouchers, the ability to keep bonuses if they return the main product, keeping the product even if they ask for their money back, etc.

Bottom line, guarantees will increase sales. The stronger the guarantee is, the larger the increase will be.

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6 thoughts on “Risk-Reversal’s Role Reversal

  1. Great piece. Skepticism is the most common form of resistance we’re familiar with as marketers. Guarantees are a great way to combat skepticism in the mind of your customer. It’s also the easiest way to overcome it without adding extra benefits or expenses to your products.

  2. Excellent post. Love those examples & insights.

    There is no doubt that guarantees do play a role in negating consumer skepticism.

    One thing I am going to take away from this post is “The stronger the guarantee is, the larger the increase will be.” And will apply this tip in my future.

  3. Guarantees have certainly helped me increase sales. And I agree with what you’re saying about strong, believable and short guarantees. The long sales letter page with bonuses and extra long guarantees is just a out off.

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