Last week I introduced a powerful psychological tool that will significantly increase your customer conversion rate called risk reversal.
(If you haven’t read it yet you should check it out here).
Risk reversal works no matter what kind of product or service you’re offering and is free to use, simple to implement, and extremely powerful when applied properly.
In this follow-up article I want to dive into more detail and show you the exact steps to make risk reversal work for you.
I guarantee that by the end of this article you’ll have everything you need to implement this technique in your own business and see immediate results.
In the beginning
Any time two people come together to conduct business one party always bears more risk than the other. Most times the risk is financial, but it can also be psychological or emotional as well. (eg, The fear of making a mistake or the fear of looking bad in front of others.) You can and should think of these risks as an “invisible wall” that exists between you and your prospect. The wall is also called “sales resistance” and exists
as a psychological defense mechanism in humans to keep us from wantonly expending our scarce resources.
As a seller, your singular focus is to lower or entirely eliminate the invisible wall.
But how?
Think back to the last time you interacted with someone trying to sell you a product or service. What was that interaction like? What were you feeling as you had the conversation? You were almost certainly a bit guarded. You may have even been a little bit suspicious perhaps? If the interaction was anything like 95% of sales attempts it went something a little like this:
Salesman: “Here, I have a product you should buy. You should buy it because I, and my company are awesome. I promise you it’s a terrific product. You can take my word on it. Why don’t you take that money you’ve worked hard to earn and give it over here, OK?”
How effective is the standard model of selling I just described? I think you’ll agree (from your own experience) that it’s unsuccessful much more often than not unless the seller is:
1) A trusted individual (you know them or they come recommended by someone you trust) or..
2) You have an extremely urgent need for their product RIGHT NOW and don’t have the time to shop around and evaluate things diligently.
If a buyer doesn’t know or especially trust the seller and/or doesn’t need it especially urgently then the deciding factor in who wins the business is the one that has the lowest price. Price is the default variable we humans use to determine whom to do business with.
So if you’re selling a product or service how do you avoid being a commodity that is only evaluated on price? How do you take control and shift the odds in your favor and ensure that this individual will do business with you over any other alternative (including the default alternative of doing nothing)?
Risk reversal!
You removing the barrier to trusting you by taking the buyer’s risk and transferring it onto yourself, the seller.
You go to the prospect and say:
“Look. You don’t know me. Because you don’t know me, I’m not going to come to you and ask you to buy this product without trusting me to a certain degree first. Instead, I’m going to trust you first. I want to be the one bearing the risk in this transaction and not you. I want you to know me, and trust my product will do what I say it can do before you have to risk your hard earned cash.”
Whoa! Radical, right? How does that interaction break down exactly?
- First, you very clearly spell out the exact benefits the prospect will realize by using your product. You clearly, concisely, and vividly describe a future scenario that goes, “If you buy this product, you will get THIS specific benefit, and THIS specific benefit, and THIS specific benefit.” You must strive to make the future scenario vivid in their minds eye by detailing exactly the kind of superior advantage they’re going to realize by buying your service.
- Once you’ve clearly articulated the specific benefits to the prospect, you take the next step and shift the risk onto yourself. You tear down the psychological wall that stands between you and leave the prospect with no defense for saying NO to you.
You establish trust and say:
“Listen – I don’t expect you to just take my word. You don’t know me and I understand that, and appreciate the thing I’m asking you to do. I want you to go ahead and take this product – and I want you to go home and try it out for 30, or 60, or 90 days and see if it doesn’t do exactly what I’m claiming it’s going to do for you. And instead of just taking it home and trying it out I’m going to give you X and Y and Z resources to make sure that you get the absolute best experience possible.
I’ve got these training materials, and these learning resources, and all these things that will ramp you up to speed as quickly and easily as possible. Then and only then, at the end of those 30, or 60, or 90 days I’m going to ask you to repay me with your hard earned money in exchange. If at the end of that time you’re not absolutely, completely, TOTALLY in love with the product – If it didn’t meet or exceed your every expectation for any reason – you to keep your money.”
(And here’s the really powerful thing folks…here’s where you just drive it home with everything you’ve got). Here’s where you say:
“If you aren’t completely in love with my product at the end of that period not only do you keep your money, but you also keep all those extra things I gave you to go along with the product. Keep those as a token of my appreciation for the time, energy, and effort you’re giving up to try my product.”
Whoa?! That’s what you call a “better than money back guarantee.” How powerful is that?
Doesn’t that sound far superior to the standard model?
Wouldn’t you like to see others use that in your own life the next time you need to go out and buy something important?
Can’t you see how that will favorably impact your own business?
Does this give you ideas?
Some caveats:
Obviously not every business is alike. What I’ve described is only one example of how you can reverse the risk. You’ll have to think carefully how to apply this to your own business, but you MUST apply it somehow.
Maybe your business is different and you don’t think the example I provided applies to you. How else might reversing the risk look in your business besides not accepting any money at all up front until a trial period ends like in the previous example?
Maybe for your business you offer to refund your prospects money if they’re not at all satisfied with your product or service?
Perhaps you make an offer to extend your time, energy, or money until they’re completely satisfied with your product or service’s performance?
Does this give you any ideas?
Now let me address a very common concern that you might have. You may say:
“Great Steve. Take the risk. Yeah, got it. But what if they take advantage of me? What if they use my product then lie to me and then only tell me they aren’t satisfied after they use it completely to their advantage? What about then, genius!”
Well, that’s a good point.
To it I say….
YES! EXACTLY!
What you’re thinking are the exact things the prospect thinks when YOU try to get THEM to buy YOUR product. In that case YOU have THEIR money and can be long gone sipping Pina Coladas on a beach somewhere with no recourse. (Ok, forgive me for all the caps there 🙂
But seriously, for those of you that are truly concerned about those who might try to use your product then lie and claim dissatisfaction.
First, I assume your product is valuable. It’s high quality. It’s something you’re proud to sell. It’s something you’d happily sell your mother, right?
In that case, you have to know that the number of credible, honorable new customers will far, far outweigh the very infrequent individual who will take advantage of you. Think of all the revenue you’ll realize from those new 10…50…100 new customers you will capture because you tore down the invisible barrier by reversing the risk.
That revenue will far outweigh the 1 in 100…or 500…customers that may take advantage of your trust. 100:1 gained business to lost business sounds like a pretty decent return to me.
How about you?
One caveat I should address is that you should be both genuine and earnest in your offer to reverse the risk. If you aren’t genuine or will be a scoundrel when it comes time to deliver on your word then don’t make the claim to begin with. You’ll damage your reputation far beyond the benefit you will get by having the risk reversal.
People don’t like to be scammed – and they remember it – and they tell their friends and anyone else who will listen. In this age of social media that may be a LOT of people. Believe me, that’s not something you want to do to your brand or personal reputation.
In Conclusion
- Risk reversal is a sales technique you use to increase trust and decrease or eliminate the invisible barrier that exists between a buyer and seller.
- With risk reversal a seller assumes the buyer’s risk by offering a clear, strong, and specific performance guarantee and then…
- …backs it up with an offer to defer compensation for a specific period of time or until the buyer is completely satisfied.
- Using risk reversal in any form will definitely increase your conversion rate – and if you don’t believe me then run an A/B split test and tell me I’m wrong.