3 Ways to Use Risk Reversals to Increase Opt-Ins & Conversions

As amusing as the scene from the classic comedy movie Tommy Boy shown above may be, it nevertheless boasts some seriously potent busy know-how. If you have ever wondered why companies put guarantees on the packaging of their products, often seemingly to their own detriment, it’s because the guarantee acts as a type of risk reversal.

As you might recall from our recent essay on guarantees, a risk reversal is any strategy or tactic that reduces or removes the actual or perceived risk a prospect has about investing in your product, service or solution. In other words, for your prospective customers, the risk rests on your shoulders. For you, the advantage is that you make a sale that you might not have otherwise had the chance to close.

Ryan Healy has this to say about risk reversals on his website:

Risk reversal goes over and above other proof elements like testimonials and cases studies.  A prospect may very well believe anecdotal proof (testimonials)… and he may believe the scientific proof (if there is any). And yet he will still think, “That’s all well and fine. Clearly, it worked for them. But will it work for me?”

In this essay, we are going to look at three types of marketing risk reversals to increase opt-ins and conversions, including:

  • Free-Trial Offers
  • Guarantees
  • Easy-Return Policy

Our goal here is to give a firm tug to two of the 7 Levers of Business (Opt-Ins and Conversions) to help you on the path to doubling your business’s profitability. Let’s dive right in!

Risk Reversal Method #1: Free-Trial Offers

The reason free trials are first on our list is because, as Neil Patel puts it on his blog, the only risk reversal better than a guarantee is a free trial. Patel conducted A/B testing of free trials and guarantees. The result? Patel’s free-trial offer took in $24,428 a month in revenue, compared with $20,976 with the guarantee in place.

A free trial is ultimately a snippet, a sample, a little taste of the full product or service. The thinking here is: after the prospect has had time to see what it’s really like to buy, they will commit to the purchase. It’s just like taking a new car for a test drive before you sign a lease.

The thing is, for the free trial to convert to a sale, it really needs to be indicative of the post-sale experience for your customer. We’ve all seen free trials that were so limited or narrow in scope that they really aren’t worth the customers’ time. To avoid that, you will want to engage in some careful planning.

“Very few people are going to give you a bunch of money to try something if they are already using a product that works,” Kenn Devane, president and CEO of MineTech, told Forbes in 2007. “I think you have to do a free trial.”

As the Forbes article points out (albeit briefly), those wanting to implement a free-trial offer for their customers need to keep a few things in mind to make the process work.

One thing Forbes mentions is that there are more challenges in creating a free-trial offer if you operate a small business than there are for larger businesses. The free-trial offer needs to suit your audience perfectly, so as the article claims, you really need there to be some market awareness of your products or services for the offer to work. A free-trial offer can give your opt-ins and conversions a big boost, but it is just one piece of your marketing mix and you’ll always need to keep in mind bringing inbound leads to it for it to be able to do its job.

Free trials work differently for opt-ins and conversions. Let’s take a look at each of those angles, in turn.

Free Trials for Increasing Opt-Ins and Conversions

According to a report from Visual Website Optimizer, GetResponse (an email marketing platform) put free trials to the test, pitting a “Try Demo” button against a “Buy Now” button. Fittingly, GetResponse got profitable results.

The outcome of GetResponse’s A/B testing of the two buttons was a 158.6% increase in free-trial sign-ups. Note that our 7 Levers of Business framework calls for simply a 10.24% increase in opt-ins to help you double your business’s profitability. While your results might not be on the same scale as those of GetResponse (a company with an existing subscriber base of 210,000), the example gives you an idea of just how dramatically adding a free-trial option can change your opt-in rate for the better, which will always lead to higher conversions.

In a quote posted alongside Visual Website Optimizer’s report, GetResponse’s Agnieszka Dabrowska added:

It’s worth testing different variations of Call to Action (CTA) on the homepage. We expected that by adding a free trial button on the homepage the number of paid accounts would decrease. We were positively surprised by the results. Not only did we manage to keep the sale at the same level, but we also noticed a huge increase in the number of free trial accounts, which will also result in a bigger number of upgrades in the future. (Source)

GetResults’ Try Now Button got results to the tune of 158.6%.

There are a few differences in how free trials work for selling products and how they work for selling services.

Increasing Product Conversions

Anxiety over the result of making a purchase can lead customers to bounce. A free trial helps you sell a product by allowing the customer to see what it’s like to own the product being offered. This doesn’t exactly work for many tangible products (we mean, you cannot just walk into the Apple Store and say, “Hi, I’d like to take home a free trial of one of your new Mac Pro’s.” Wouldn’t it be nice if it did work that way?). It doesn’t work that way, and that’s why retailers employ the flexible return policy, which is another type of risk reversal that we’ll cover a little later in this essay.

Free product trials work best for digital products, especially for software and digital deliverables, like eBooks. You are likely to have tried a free-trial version of a computer application. Note that we make a distinction between “demo” software products and bona fide free trials. Demo versions often have many features striped from them; free software trials typically have only the limitations of time and save/export functions being grayed out of the application.

Perhaps a simpler free-trial offer is the kind that Amazon uses for eBooks. The Amazon model for free trials of eBooks is the “Send sample now” function. Clicking that button allows a customer to read the first chapter of a book free of charge. It’s just a peek inside, of course. But often, that’s all it takes to close the sale.

Amazon's "Send Sample" button.

Amazon’s “Send sample now” button.

Increasing Service Conversions

An example of using the free-trial method of increasing conversions is Netflix.

For those of us in Australia, Netflix is of course, not “officially” here, but plenty of people are using workarounds to access the service (leaving Aussie-based video streaming upstarts to compete with a company that technically doesn’t operate in the country).

Netflix offers a one-month free trial of their streaming video service for new customers. After the month is over, customers can choose to continue the service for $7.99 (USD) per month, or opt-out. During the month, trial customers are given the full Netflix streaming service – giving them a clear indication of the post-sale experience.

And that’s the takeaway for you: go ahead and let your prospects take the test drive – and let them put the engine through its paces, all the way up to fifth gear, while you’re at it.

The trial period should look as much like purchasing as possible. The tactic, of course works. Netflix added 2.3 million US subscribers in 2013; 1.74 million, internationally. The result: 44 million Netflix subscribers worldwide.

The other thing you can learn from Netflix is that you should make it really simple to take up the free offer. You need the customer to actually use your product or service for the free trial to be effective.

The need to attend to and nurture the prospect during the trial is why you sometimes get an auto-response message from a company whose free trial for which you have signed up.

Nurturing the Lead Mid-Trial

Babbel, a language learning app, offers a free trial of its products. If the customer loses interest (stops signing in) during the trial period, the company first sends out an automated message that provides customer support options.

If the customer does not bite on that and still fails to log in, Babbel sends out an automatic extension to the trial period, based on the assumption that the customer got distracted.

The third round of auto-response is when Babbel sends out a “last chance to claim your 3-month trial for free” message, offering to extend the trial period to 90 days.

Babbel offers to extend the trial period if it thinks the customer has become distracted.

Babbel offers to extend the trial period if it thinks the customer has become distracted.

Babbel sells products, but the exact same auto-response email sequence can be applied to the sale of services just as well.

This does bring us to a discussion of the ideal duration of a free trial. The most common durations are 30- and 90-day free trials, though 7- and 14-day ones are also common.

Keep in mind, though, that the shorter the duration, the less perceived value for your customers. Decreasing perceived value can put a damper on opt-ins and conversions, and result in a spike in leads leaking from the sales funnel.

Bonus Tip: The Almost-Free Trial

TheRevelationEffect.com employs a slightly different approach to the free trial risk reversal. The customer pays only a $4.95 processing fee upfront, uses the site’s digital products for 14 days, and is charged the remaining balance of $42.05, unless they choose to opt-out.

This is a very clear marketing (and copywriting) tactic, as the “processing fee” could possibly not only cover the cost of the lead, but more importantly that small charge allows for the merchant facility to put in place an ‘automatic’ second payment and subsequent balance pay-off after the trial period.

By changing the “positioning” of the offer from a simple two-part payment, to a “Try Before You Buy” offer, the prospect’s perception is re-framed in a very profitable way.

Here’s the thing – all you need to do is get your prospect to agree to a micro-commitment, in this case, in the form of a small upfront “processing fee that allows for the automatic charge of the balance.”

Also of note, the site doubles the irresistibility by offering a 60-day money-back guarantee in addition to the trial.

Therevelationeffect.com's trial offer.

TheRevelationEffect.com’s trial offer.


Risk Reversal Method #2: Guarantees

We recently discussed guarantees at length in another essay here on the site. While that essay is surely worth the read, the value of the guarantee is worth repeating.

As we mentioned in our earlier article, Neil Patel reports that he increased his conversions by 21% just by adding a 30-day money-back guarantee to his marketing mix. Patel goes on to tell us that he increased overall revenue by 6.4% with his guarantee in place.

In that article, we provided you with explanations, examples, and templates of the following 10 guarantee types, as follows:

  • The 100% Money-Back Guarantee
  • The 100% Money-Back Guarantee PLUS keep the bonuses
  • The ‘Prove You Used It’ Guarantee
  • The 100% Guaranteed Results
  • The ‘We’ll Make It Up to You’ Guarantee
  • The ‘Double Your Money Back’ Guarantee
  • The ‘We’ll Pay the Competition’ Guarantee

For a solid example of the be-all, end-all 100% money-back guarantee, check out DesignCrowd’s money-back guarantee which is by-the-book.

If a customer so much as doesn’t like a design, they can claim a refund within 30 days. If the design work is not delivered, DesignCrowd will refund the money, plus posting fees for the contest. The site also prominently its full-refund policy, clearly stating the terms of the guarantee (another ultra-important step in the implementation of a guarantee).

DesignCrowd uses the most popular guarantee type: 30-days, satisfaction guaranteed.

DesignCrowd uses the most popular guarantee type: 30-days, satisfaction guaranteed.


Risk Reversal Method #3: Easy-Return Policy

BigCommerce reports that an easy- (and long-running) return policy has been shown to increase sales exponentially. BigCommerce advises you to accept returns without hassle, for as long as you feel comfortable. Stress over purchasing, the report states, decreases inversely with the increase in the length of a return period for a given business!

Another timeless risk reversal is the easy-return policy. Also known as the flexible-return policy or hassle-free return policy, allowing a customer a no-questions-asked return of a product is perhaps the most efficient way to go about implementing a risk reversal in your marketing plan.

In fact, a return policy functions a lot like a guarantee, and even draws its legal basis from the same laws. Truth be told, as we established in our discussion of guarantees, you are obligated to accept a return within a reasonable timeframe already. Why not make it a selling point?

Apple’s return policy is easy as pie, and more importantly, clearly stated on the site.

Have you ever tried to return a product to a store with a nasty return policy? Something about that aspect of the deal made you never want to go back there, right? Implementing an easy-return policy helps you to be proactive against your competitors who just might have such a nasty return policy in place.

Think of the biggest name in the retail sector, Walmart. That company is known for having one of the easiest return policies of all. Sure, they take back millions of items per day, but compare that with their non-refunded sales and you see just how negligible those returns really are. Walmart even takes returns of unopened dry food goods, and throws them immediately in the trash!

Walmart founder Sam Walton learned this skill from his experiences living in main street America where the most successful small businesses (the corner stores, five-and-dimes, and apothecaries prevalent in the United States during the early-to-mid-20th century) in his day were those which had the good sense to offer easy-return policies. Even as Walton’s department store empire put those kinds of businesses out of business, en masse, he was shrewd enough to implement hassle-free returns in his stores.

In more recent history, Zappos founder Nick Swinmurn applied an easy-return policy to his novel business, and overcame the objections of the world. Plenty of people told Swinmurn he was crazy when he first said he wanted to sell shoes online. They would say to him, “But you’ve got to try them on?”, “You’ve got to let your significant other give you feedback?”, “What if they just don’t fit?”, “It’ll never work!”

But they were all wrong. Why? Because Swinmurn’s fledgling Zappos said “no problem” to all sorts of returns.

Zappos' return policy is ultra-flexible. They'll take your shoes for up to one year. That's reversing the risk!

Zappos’ return policy is ultra-flexible. They’ll take your shoes for up to one year. That’s reversing the risk!

Zappos’ easy-return policy succeeds at reversing the risk for the customer. The company makes it stress-free to buy shoes (online – where others said it couldn’t be done!) from them.

The result? As of 2011, Zappos is valued at more than $2.158 billion (USD). That’s a case of a cleverly implemented risk reversal working well. Keep in mind that the alternative for Swinmurn, originally had he listened to the naysayers, would have been selling no shoes online – something his company has since done better than anyone. 

Who knew there was so much to learn from Tommy Boy?

As the older fellow in our beloved video says, “Son, if you are not talking about a guarantee, skip it! My customers need to see that little label (points at the guarantee) staring them right in the eyes.”

As Chris Farley says, a guarantee makes the customer feel all “warm and fuzzy inside.” And that’s the basics of it, in a nutshell. To reiterate, legally speaking, you HAVE to offer a guarantee. Why not put it in your marketing materials, and let it work for you? As you can tell, you can utilize risk reversal in a variety of ways, so feel free to get creative!


Pete Williams is an entrepreneur, author, and marketer from Melbourne, Australia.

Before being honored “Australia’s Richard Branson” in media publications all over the continent, Pete was just 21 years old when he sold Australia’s version of Yankee Stadium, The Melbourne Cricket Ground For Under $500! Don’t believe it? You will! Check out the story in the FAQ section (it really is our most asked question).

Since then, he’s done some cool stuff like write the international smash hit ‘How to Turn Your Million-Dollar Idea Into a Reality’ (+ the upcoming ‘It’s Not About the Product‘) and he’s created a bunch of companies including Infiniti Telecommunications, On Hold Advertising, Simply Headsets and Preneur Group.

Lots of other people think he’s pretty good too! He’s been announced as the Global Runner-Up in the JCI Creative Young Entrepreneur Awards for 2009, the Southern Region Finalist in the Ernst & Young 2010 Entrepreneur of the Year, and a member of SmartCompany’s Top 30 Under 30.

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