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.