Risk Reversal for Immediate and Long Term Sales

Risk-reversal should be a common sense and widely known marketing concept but, as Mark Twain once said, “Common sense is none too common.”
Risk-reversal is simply taking on the risk yourself and taking it away from your customer. RR comes in many forms including: guarantees, free samples, “try one”, delayed payments... and the list goes on as far as your imagination works.
This principles works in every business setting, including the arts. Singers ought to see my note at the end of this blog.
Let’s be a bit specific and look at guarantees. Some business people create conditional guarantees. Buy this and if it doesn’t work, provided you did your part, we’ll give you your money back. Many place time restrictions, performance on the customer’s part, times of operations and other conditions. They do so in the belief that the customers will take advantage of them. They’ll use the product, get the benefit and then try to get their money back.
The risk, therefore, remains with the customer.
None of this is right or wrong. It’s simply an opportunity for you. It’s part of my Zig-Zag Theory or Paradigm. If others offer conditions, offer none. If they have time restrictions, make yours unlimited time. If they say “you must perform” then you say “you don’t even have to perform.”
That gets people’s attention and they will be more likely to try your products.
Of course if your product is junk, you might have a problem. I say “might” because I once worked (for a short time) with a company that produced extreme vanity products. Their diet products included ephedrine and other dangerous substances. The FDA had not banned them yet, but the owners knew of the negative effects. They also knew that nearly every product they had either didn’t work or only worked temporarily. They preyed upon people’s gullibility and weaknesses. This was most evident in their guarantees. Wisely, they had ZERO conditions for getting your money back except returning the product. Such a guarantees allowed a skeptical customer to try the product without fear of being ripped off – which, ironically they were with these products that cost $2 to make and sold for $135.
Now, I’m sounding contradictory. A rip-off company that let customers rip them off if they wanted. Let’s just call it honor among thieves because these guys knew the facts of marketing. And the salient fact to this discussion is this proven bit of knowledge on guarantees: no matter how bad the product no more than 25% of the customers will return the product. Of course the higher the cost of the goods or service, the closer to 25% you’ll be.
They sold hundreds of thousands of bottles of diet pills, thigh shrinkers, fat lip salve, muscles builders while you sleep and so forth. I’d go to their mail room and every day large bins would arrive with returned product. They checked for the unopened ones and restocked their shelves. The opened ones would be trashed. They had their standards. Never did they get more than a 20% return rate. After taking out the products that were just restocked they had no more than a 10% rate. Their margins and business plan used the 25% figure so each month they exceeded their profit projections.
Learn from them about guarantees. Guarantees work. Unconditional guarantees work even better. Now that you know about the predictability of returns, make sure your margins can handle the returns. Above all, make sure that you have a quality product with good margins and you’ll have a field day in the profit picture. The few returns and word of mouth promotions will help you be successful.

Special Note to Singers: Have you ever offered a customer an unconditional money back guarantee – “Try my singing. If you don’t like me, no charge.” That will turn some heads your way because it screams “I’m confident and I’m that good.” Someone you don’t have as a customer will become a customer.

Self-Interest is Reality and Good

In my last post I said you shouldn’t be like the socialists that want to change human behavior. Several wondered why I would say such a provocative thing on a marketing blog.

(Pictured in the USSR, I donate a new bell we made from a melted down artillery piece. It was the first bell put into a Russian cathedral since the Soviets stole bells from Orthodox churches to melt them into cannons.)

Simple. Marketing reaches over all borders and philosophies. Socialism and communism are based upon the public ownership of the means of production. State ownership of such things as banks, car companies, health care, etc. Problem is, it doesn’t work because it violates the laws of human behavior. It hopes and tries to legislate that people will NOT do something out of their own self interest. But, everyone works from the basis of their own self interest. It is counter to EVERY specie on Earth to first protect themselves from danger. That’s self interest.

I lived in England at the height of it's socialist push in the 1960's. I lived in France and watch what happened to the people there in the 1970's. And I spent 10 years doing business in the Soviet Union and Russia. Socialism destroys minds.

Deer’s hide, runaway or freeze instinctively to protect themselves. Mothers are sited as a departure from this. Mother’s in nature instinctively protect their new babies. But, once out of the nest virtually all species soon forget the off spring and fend for themselves. Why did mother’s protect the young? In animals it is instinct for the survival of the species by one that can defend taking care of several, and in some cases many, that are defenseless. Instinct is self interest. We’re doing what we must do.

For humans, communism and socialism demand that you ignore what is best for you and put it aside for the benefit of the state. Trouble is, the state also acts out of its self interest and if you don’t like it then the state has ways to crush you. It’s self preservation will trump you. Freedom is the casualty of socialism. Freedom is in everyone’s individual self interest. You do not like someone telling you what to do. You know that you know better than some faceless person in the capital deciding what’s best for you.

Socialism loves the Marxian maxim, “From each according to his ability, to each according to his needs.” Clever but cruel. Who decides what your ability is? In a free market you and the market place do. In socialism someone else decides. Who decides what your need is? In a free market you take what you earn and determine how you’ll spend it. You may spend it on wants or needs. Your choice.

In the movie The Patriot, loosely based upon the life of the Swamp Fox Francis Marion who fought in the Revolutionary War. He serves in the local legislature and they’re trying to decide if they should vote to breakaway from England. Much is made of the tyranny of the king 3000 miles away deciding how they must live. Yet they all had their own bills locally telling others how to live. The Patriot states boldly to his fellow legislators, “I’m not sure which is worse. One tyrant 3000 miles away or 3000 tyrants one mile away.”

Thomas Jefferson wrote, “I have sworn upon the altar of God eternal hostility against every form of tyranny imposed upon the mind of man."

When you decide what is best for other people; when you decide they need this more than their wants; when you decide what they ought to have and that they need to get educated to appreciate what you’re selling, you’ve entered the world of socialism where nothing works except in your image of how it ought to work. Socialists push legislation that people don’t want or doll it up so that it looks alluring but is ensnaring. They want what they want regardless of what you want. More than 80% of Americans like their own health care plans. Mandatory health care run by the government is disliked by 60% as of December, 2009. But the proponents know better than we do and are going to push it down everyone’s throats. I’ve seen the same thing with those who favor or oppose abortion. Steve Forbes once pointed out that until the majority of Americans favor a ban on abortion we have no business dictating to the majority, even if we find it morally repugnant. Freedom ought to rule even if it is inconvenient.

Good marketers believe in freedom because they have the confidence that their products has such high benefits no one could possibly resist wanting their product. They know no one owes them anything. No one MUST do something for them. Instead they learn: Irresistible, compelling, alluring, unavoidable, enticing because all are words of freedom... words marketers live by.

Wants vs. Needs -- no contest

Not all business is marketing... just the stuff that matters. Someone does need to make the product. But they’ve got to make something someone wants. “Wants” are all about marketing.

Often times inventors seek to create something they like that solves a problem that intrigues them. In the end it doesn’t sell because no one else really cares or his solution is worse than the problem. Inventors (include in that genre composers, writers, creative performers, etc.) seriously people “need” their product. (In the picture are the other founders of VMT getting an award for Innovation because we focused on what people want most -- an affordable car that saves fuel and still has high performance. From L-R: Dick Wilson, Gary Lee, Steve Sutherland and Mark Stoddard.)

Maybe. But here’s the rub, Hamlet. It is far better to create something that people want rather than something they need. Go to a poor section of town. What do they need? Most of all they need education.

Everyone is six inches away from being successful, but that six inches is between their ears. Got to fill it with something that’s useful and accurate. Madame Walker who had the distinction of being the first American millionaire who came from African lineage, once said, “It’s not what you know that can hurt you, but what you know that just ain’t so.” Poor people know a lot. They just don’t know what they need to succeed.

Can you make money from what they need? Sure. But it’s more difficult. It’s better to find out what people want. Those poor people need education and skip that. They want televisions, DVDs, CDs, and cars they can’t afford. Obviously, they’ll sacrifice what they want for what they need.

How does that apply to performers? Quit trying to tell people that what you have they need. Understand what people really want. Some call that selling out. That is foolish.

Shakespeare thoroughly understood what people wanted – action, romance, love, passion, intrigue, something new, something different, a way of looking at things they’ve never thought of, reaffirmation of values, power, and glory.

Even simpler we all know people are motivated or do things because of five simple things: sex, power, love, money, and glory. Human emotions are immutable. The entire human race deals with the big five constantly. Ask a crime detective what the motive for the crime was... “one of the big five.” Ask a marketer why someone bought something. Same answer. Ask a priest who someone sinned. As Sam once played again, “It’s still the same old story, it’s a fight for love and glory.”

Don’t be like the socialists who try to retool human behavior. “If only people acted another way.” They don’t, won’t, can’t and shouldn’t. Goodness fills sex, power, love, money and glory. So does perverseness. Let your product lead the human race to the good side of these things.

Sell them what they want and they’ll make you wealthy. As you do that, you’ll be performing the job of marketing, the essential stuff of business.