What’s this “Risk Reversal” thing all about, I hear you ask?

Well to cut a long story short:

The concept of Risk Reversal is simple, but it requires some boldness and guts. Basically, it means that YOU, the businessperson looking to close a sale, should identify the various reasons a potential customer would hesitate to buy. You then think of little things you can do to overcome those obstacles.

Risk Reversal is like a Guarantee, but way more powerful.

It’s a guarantee on steroids. The Arnold Schwarzenegger of all guarantees. The kind a buyer cannot turn away from because the buyer has nothing to lose and everything to gain.

Jay Abraham

Jay Abraham with Vishen and the Mindvalley Team, LA Jan 2012

Before we go there…let’s look at the Basic Guarantee that 90% of online and offline merchants usually have. Let’s label this Level 1 on the Scale of Guarantees.

Level 1 – The Standard Guarantee

A standard guarantee offers buyers a 30 day period to return the product for a full refund. This type of guarantee is required by law in many countries such as the USA.

Yuck. It’s mediocre and your competition probably offers it too. Boring, mind-numbing and barely even noticeable. Truly successful businesses always go beyond a Level 1 guarantee.

The next step is Level 2.

Level 2 – The Extended Time Period Guarantee

A Level 2 guarantee will extend this 30 day period to 90 or more days. Many sellers swear by the 90 day guarantee. By giving the customer a full 90 days to try your product you often lower the refund rate.

Here’s why:

Let’s say Mary buys a $90 set of aerobics DVDs from your online store with a 30 day guarantee. It takes 10 days to reach her. Mary now HAS to test the DVDs in the next 20 days to see if she likes them. But she finds herself too busy, all of a sudden she has only 2 days left to return the product for a full refund. It’s still sitting on her shelf untouched – feeling the pressure, she returns it unopened.

But if Mary had been given more time to try out the product, there’s a good chance she would not have felt pressured and may have taken more time to test, play and fall in love with the product.

If you’re selling products online, you can often create significant increases in sales AND lower your refund rate just by extending your guarantee to 90 days.

But Level 2 is nowhere close to what a guarantee can do.

Now we step into the Zone of Risk Reversal

A few years ago, a guy by the name of Nick Swinmurn got frustrated because he could never find the right kinds of shoes he liked in the local mall. Nick went home that day and went online hoping to browse through online shoe stores, but there were only a few of them set up back in 1999.

Nick wondered if he could establish his own online shoe store. The idea kept jumping around in his head and eventually he quit his day job and founded Zappos.

At first people told him he was crazy. Shoes are something you need to hold in your hand before buying. You need to try them on. Feel the leather. Have your spouse see them on you and let you know what they think. There were a multitude of reasons to NOT buy shoes online.

Yet Zappos thrived. In 2005, the 6-year-old company did $370 million in shoe sales!


Well let me tell you what got me hooked on Zappos.

Sure, Zappos had a wider variety than a traditional shoe store. But it was Zappos’ Risk Reversal policy that really made me a loyal customer. I remember the decision making process I went through before buying my first pair of Kenneth Coles on Zappos.

* What if I don’t like that shade of brown? Can I return it? Zappos’ answer was yes.

* If I try it on and find it won’t fit – can I return it and get another pair? Their answer: yes.

* Will you pay for the shipping – and the cost of return shipping? Their answer was again: yes!

* If I buy it and then randomly change my mind – can I still send it back and get my dough back? Again, the answer was yes.

* If I bought it and then found one for a cheaper price on Canal Street, can I send it back? Again – yes.

They had an answer for every SINGLE doubt I had. They were prepared to lose a few bucks on return shipping because they were smart enough to understand that once I bought the shoes – I would probably really like it and want to keep it.

They knew their prices were good and they knew that once they got me hooked, I’d be telling my friends about them.

They were willing to bend over backwards to give me the best service possible and eliminate every single doubt from my mind. No physical shoe store I know would place that much trust in me as a customer.

Zappos had effectively reversed every single doubt I could have in my mind. They made it a no-brainer to be their customer.

I did buy a pair of $120 shoes from them. And I bought another one later that year. And I told 8 friends about them. And I’ve NEVER EVER shopped in a physical shoe store in New York since.

That my friend – is Risk Reversal.

If you missed Jay Abraham’s 2-min introduction to the Risk Reversal technique check out what he has to say for himself here – after all Jay is one of the online marketing greats!

But enough about my shoe buying habits –  what are the best guarantees you’ve seen online? Share them in the comments section below!

P.S. Once you go beyond Level 1 and 2, there are 4 more levels of Guarantees that fall in the Risk Reversal Zone. I will cover this in a separate article soon and will alert you on Facebook once it has been published.

[googleplusauthor] CEO and Founder of Mindvalley

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