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Risk-Reversal’s Role Reversal

Posted on April 17, 2008 | Filed Under Copywriting, Uncategorized 

By Michel Fortin

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.

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, no guarantees can outperform an offer with one. Why? This is perhaps because the industry is oversaturated with guarantees, especially far-fetched ones, that being different can provide a unique twist to an offer.

Incidentally, one such bold non-guarantee offer that has worked extremely well — in the fitness industry, which is drowning in them (and some of them are so far-fetched they are too good to be true) — is the offer from bodybuilder Matt Furey.

Remember that a guarantee’s job is not to relieve fear in a direct sense. It’s to increase confidence in the product. Matt Furey does a wonderful job in explaining why he doesn’t offer a guarantee. His copy demonstrates his confidence in his product, which is like a guarantee in itself.

Speaking of far-fetched, this is another type of guarantee that can become counterproductive.

Guarantees that are too strong (like one-year, 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 author is trying to build perceived value in areas other than the product itself to make up for the lack.

People can see through this, which is often conducive to low sales.

The purpose of a guarantee is threefold: to communicate that the product has intrinsic worth (e.g., “this is product is so good, I guarantee it!”), to make the buyer feel more at ease with their buying decision, and to encourage greater sales and profits.

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

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

Just like the power of “reasons-why” advertising, back it up. Provide a logical, commonsensical explanation behind your guarantee to justify it. The more you do, the more believable your guarantee will be. Otherwise, an overzealous guarantee will make your promise — and therefore your offer — suspect.

But in the majority of cases, if you offer a product or service without a guarantee, you’re losing a great percentage of potential sales.

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 the greatest one he ever made.

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.

Obviously, the Internet has opened many doors, including those to many unscrupulous entrepreneurs.

Scams and snake oils are rampant online. Since there is no official police or watchdog on the Internet (other than country-specific alphabet agencies, or regionally accredited entities), such scams are probably even greater as a result.

I would even venture to say that millions of dollars are lost to these scamsters each month. The Internet is rife with fraudulent offers, phishing attempts and shoddy products. Even laws, like the CAN-SPAM Act, don’t stop crafty entrepreneurs who are determined to bypass the systems to sell their wares.

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

In addition to all methods and elements of proof that you can and should add to your copy, 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 use of testimonials, proof elements, 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 guarantees are also powerful tools and probably one of the most underutilized.

Business owners are often leery themselves of adding or extending guarantees because they fear the onslaught of losses from returns.

If the product is mediocre, sad to say that this fear is justified. But most products are good and honest. (And granted, there are 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, 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 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.

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

But adding a guarantee 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.

In other words, when you offer a guarantee, you reduce the skepticism around the purchase of your product or service. But guarantees grant you an almost instant credibility with potential customers.

The existence of a guarantee raises their level of confidence — not only in buying from you but in you. Thus, they are more apt to being tolerant and perhaps even accept a few flaws, thereby reducing the need to return the product at the slightest “itch.”

And this is because they feel they are in good hands, whether they know this experientially or not.

According to certain marketers such as Ayers, a strong guarantee does result in fewer returns. For instance, Ayers got fewer returns with a 90-day guarantee than he did with a 30-day guarantee. Others got fewer returns when they offered to let clients keep some bonus items if the product was returned.

The parallel obviously dictates. While people order, especially from the Internet because of the convenience it offers, an offer that provides a no-hassle return policy (or risk-free promise) adds to the convenience factor and instills a greater confidence in the buyer’s psyche.

Ultimately, add a guarantee to your offer. But don’t stop with just a plain guarantee, or increasing your guarantee’s timeframe. Be creative with your guarantee.

Think about double guarantees, double- or triple-your-money-back guarantees, gift certificates, the ability to keep bonuses if they return the main product, keeping the product even if they ask for their money back, and even no guarantees if you happen to be in an industry inundated and fraught with them.

Bottom line, guarantees will increase sales. And the stronger the guarantee, the larger the increase. If you offer a product or service, find ways to offer a guarantee along with it.

Rather than taking a risk by removing it from your potential clients’ decisions, you will likely be decreasing it.

— About the Author —
Michel Fortin is a direct response copywriter, marketing strategy consultant, and instrumental in some of the most lucrative online businesses and wildly successful marketing campaigns to ever hit the web. For more articles like this one, please visit his blog at http://www.michelfortin.com/ and subscribe to his RSS feed.

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