Q.

Hi Adrian, I have had my last 3 prospects all ask me if I would be willing to GUARANTEE my coaching results. Is there a SAFE way I can offer some form of risk-reversal where I won’t get burned?

 

As a business coach, you will gain the ability to close more sales by eliminating the perception of risk your prospects may feel when they buy your services.

The concept of Risk Reversal is simple but it requires some boldness and guts. Basically, it means that YOU, the business coach looking to close a sale, should identify the various reasons a potential client would hesitate to buy.

You then think of little things you can do to overcome those reasons.

Risk Reversal is like a guarantee but much more powerful. It’s a guarantee on steroids.

It’s a guarantee that a buyer can’t turn away from because they have nothing to lose and everything to gain. Let’s look at the Basic Guarantee that 90% of online and offline merchants usually offer. Let’s label this Level 1 on the Scale of Guarantees.

Level 1

Level 1 is called 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 US. This guarantee is mediocre… and more than likely ALL of your competitors probably offer it as well.

Truly successful businesses always go far beyond a Level 1 guarantee. 

Level 2

The next step is Level 2. A Level 2 Guarantee is known as The Extended Time Period Guarantee. This guarantee will extend the 30-day guarantee 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 or service, 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 only has 2 days left to return the product for a full refund if she discovers she’s not satisfied. It’s still sitting on her shelf untouched… so 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 or services 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. Let’s step into the Zone of Risk Reversal. Several years ago, a guy by the name of Nick got frustrated because he could never find the right kinds of shoes he liked at the local mall.

Nick went home that day and went online… hoping to browse through online shoe stores… but there were few of them set up at that time.

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.com. 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. Customers want to feel the leather. They want their spouse to see them on you and let you know what they think. There was a multitude of reasons to NOT buy shoes online.

Yet Zappos thrived. By 2005, the 6-year-old company did $370 million in shoe sales… and in July 2009, the company announced it would be acquired by Amazon.com in an all-stock deal worth about $1.2 billion. How?

Well, let’s explore what it is that gets most people hooked on Zappos. Sure, Zappos had a wider variety than a traditional shoe store.

But it was Zappos Risk Reversal policy that really converts most prospects into loyal customers. Here’s the decision-making process prospects go through before buying their 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 buy it and then find one for a cheaper price on Canal Street, can I send it back? Again – yes. 

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

They knew their prices were good and they knew that once they got them hooked, they would be willing to tell their friends about them.

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

Zappos had effectively reversed every single doubt prospects could have in their mind. They made it a no-brainer to be their customer. That’s risk reversal. But my point is this… guarantees are fine but they’ll only get you so far.

Risk Reversal on the other hand will make you millions… and help you to dominate your market. But we’re not done yet.

Let’s look at guarantees that effectively Reverse the Buyer’s Risk and make it a no-brainer to purchase from you. You see, once you go beyond Level 1 and 2… there are 4 more levels of guarantees that fall in the Risk-Reversal Zone.

Level 3

For example, a Level 3 Guarantee is called The Try and Then Buy Guarantee. This type of guarantee allows the buyer to pay AFTER they have used the product or service for 30 days.

The buyer pays nothing upfront… or perhaps they pay a small token amount like $1 to prove they’re a serious customer. They then know that they will be billed later unless they cancel.

Here’s how this type of guarantee works. You allow the buyer to make a purchase for a mere dollar.

They get to play around with the product or try the service for 30 days. At the end of 30 days, unless they cancel, they authorize you to bill them the balance owed.

Since the vast majority of customers are satisfied with their purchases, this saves the business owner the time, effort, and hassle of chasing down the prospect after the trial period to collect their payment information.

Level 4

A Level 4 Guarantee is called Guaranteed Results or a Full Refund. In essence, you guarantee a certain result, perhaps that you’ll lose 10 pounds in 21 days… and allow the customer to claim a full refund if this goal isn’t met.

This guarantee is not only fair to the customer… it helps close sales because you’re painting a positive picture in the customer’s mind of what your product can do for them. You can make this guarantee even stronger by calling it the “Pay only if it works guarantee.”

Level 5

Next is a Level 5 Guarantee known as the Customer Always Wins Guarantee. This is where the customer can return the main product for a full refund but can still keep the accompanying bonus gifts. Let’s say you sell energy-efficient lighting.

As a bonus on sales over $50, you offer the customer a free energy-efficient bulb worth $15. Of course, the bulb would have cost you only $5 wholesale, but the perceived value to the customer is $15.

You allow the customer to return the lighting within 60 days if they aren’t satisfied with their purchase. But they can still keep the bulb as a thank you for trying out your store.

So, the customer wins either way. That’s very reassuring to them… and they see they will at least receive something for their time. And that’s something to very much keep in mind these days. Most prospects value their time as much or more than their money, especially on sales below $50.

Now, some business owners worry that someone might take advantage of their generosity when using this guarantee. Well, they’re right… someone could. But you’ll find that very, very few actually do.

Most people are fundamentally good. When using this type of guarantee you’ll find that less than one-half of one percent of buyers attempt to take advantage of this situation.

And so what if you lose $5 a few times due to a few unethical buyers. The increase in sales you get will more than makeup for this.

This guarantee and risk reversal policy works well because of the psychological image it sets up in the buyer’s mind. Simply put… the buyer can’t possibly lose. Even if they make the purchase and then have to return the light fixtures, they still end up with a free bulb.

So, to them, they always win! That’s powerful risk reversal at work.

However, the key here is to ALWAYS test your guarantee BEFORE you make it policy. Test it for 30 days and track your returns to see if this policy will be abused.

Then make your final decision whether to implement it or not. I think you’ll find the additional sales this type of guarantee attracts more than offsets the returns. A Level 5 Guarantee like we just discussed is where many of the BEST businesses stop. But there is one more level you should consider.

Level 6

That level is known as a Level 6 Guarantee… The Platinum Guarantee. This is where you offer the customer a double your money-back guarantee.

Obviously, this requires some boldness on your part… plus you better know for a fact that you do indeed have an excellent product. If you do… this guarantee can be market-dominating.

I teach a modified version of this guarantee to business coaches that helps them to sign up new coaching clients. Here’s my exact script I use.

“My normal coaching fee is $5,000 per month for 12 months. I charge that fee because I have a track record of delivering well over 6 figures for my clients within the first 12 months.

Unfortunately, thanks to this Covid debacle, I don’t believe any business owner can afford a $5,000 monthly coaching fee right now… so suppose we do this instead? Like you, I have monthly bills and hard costs I have to pay.

So, instead of paying me $5,000 per month, suppose you only pay me $997 per month so I can cover my hard costs, and I’ll make up the balance through a “revenue share” arrangement with you… where for every dollar of ADDITIONAL revenue I help you earn, you keep 90 cents of that and pay me just 10 cents.

That makes our working together extremely affordable for you… and it holds me accountable to produce results for you… or I’m not going to get paid.

But I also know that for most of you, money is tight right now, and you need to make sure that $997 investment will be a smart one. So, let me make our working together a total no-brainer.

Before you hand me a cent, let me put money in your pocket. To get started, take me for a test drive! Not for a month… not even for a week! Give me just 90 minutes! In that 90-minute meeting, I will find you a MINIMUM of $3,000 in additional ‘in-your-pocket’ revenue.

That’s over a 300% return on your first month’s investment. And, you aren’t going to make that initial $997 investment until AFTER I put that money in your pocket.

Here’s another way to look at this.

In essence, I’m going to coach you for free in month one, PLUS pay you an additional $2,000 for the privilege of coaching you. How do I sound so far?

But that’s just for starters. Beginning with month 2… and every month going forward, I’m going to write into our agreement a “double my fee” guarantee.

Every month when you pay me my $997 fee… by the end of that month, I will return back to your business, a MINIMUM of $2,000 in additional annual revenue. And if I ever fail to deliver on that guarantee in any month… I will give you back my coaching fee for that month.

I don’t know of any other business coach that offers a guarantee like mine. Who’s ready to get started?”

Now that’s a market-dominating guarantee. But consider what’s really taking place here.

A risk reversal like this one incentivizes the prospect to buy. It makes the prospect literally say to themselves that I would be an absolute fool if I didn’t buy. I then teach my coaches how and where to find the additional money in this guarantee, and believe it or not, it takes them less than 90 minutes.

Let me know if you need help offering a guarantee like this one.

The real key here is to discover the biggest fears, problems, or concerns your prospects have when it comes to buying what you sell. What is it that may be stopping them from buying your product or service?

Then develop a risk reversal strategy that completely eliminates whatever that is… and you will see your sales soar.