Generate sales leads

Increasing Sales Through Risk Reversal

I recently read an interesting article in the Reading Chronicle about a Kitchen design business. They identified one of the biggest problems in their industry as being “kitchen conversions never being completed on time”. So they chose to do something about it.

They decided to guarantee they finished on time and to offer their customers a £100 refund for every day they were late in finishing.

The reason they did this was something called “Risk Reversal”. Risk Reversal is a great way of marketing any business. Last year NatWest Bank offered a £100 incentive if they were not able to reduce someone’s current mortgage repayment during a mortgage review.

I buy most of my audio educational products from a company called Nightingale Connant. They sell personal and business development CD’s ranging in price from £49.99 to £1,000. They offer a risk reversal on most of their CD’s. They will send you the CD’s and you can keep them for 30 days. At the end of this time you either send them back, or pay for them.

We offer training courses in sales and marketing and at the end of each day, our clients are asked to evaluate the day and if they are not delighted with the service they have received, we offer them a full refund.

So, why do these companies offer refunds and guarantees? It’s simple; they know that by guaranteeing something more people will buy from them. Take the kitchen company for example – if you asked for a quote from three kitchen companies and only one of them guaranteed to get the job done on time and they backed up that guarantee with a £100 refund for every day they were late in completing the job, which kitchen designer would you choose? You know the answer!

There is of course one very important rule to this strategy. You must be able to do what you guarantee. In other word, if NatWest were not able to reduce people’s mortgages it would have cost them a lot of money.

Let’s just consider for a moment that you sell widgets and that every time you advertise in the XYZ magazine you sell 100 of them. Let’s also suggest that by offering a money back guarantee you manage to sell an additional 30% (130 widgets). Would it be a problem if two people asked for their money back? Only you know the answer to this.

So my advice to you in your business is to consider risk reversal. Use it in a tested and systematic way to significantly increase the return on investment (ROI) for many of your marketing approaches.

Statistically the fact is – The number one reason that people decide not to buy is ‘the fear of making a mistake’. So the more you can do to remove the risk of buying,the better it is for you and the more sales you will convert.

Look at it this way – if someone bought something from you and they were not happy about it, you would probably give them their money back, or a

portion of it. Using rick reversal means doing this up front and telling people that they can have their money back, if they are not happy.

For further great marketing ideas call Steve Mills Marketing on 0118 930 5700.