Risk Reversal for Small Business

Risk Reversal for Small Business.

Nobody wants to lose. It makes us feel stupid. Everyone hates to make bad decisions, or waste money and resource. This is one reason why we are all sceptical about taking risk. However, for a businessman, every decision is a risk. No matter how big or small, it affects sales in one way or another.


  • When it comes to closing sales, you are at risk.
  • In every transaction, the purchaser is also taking risk.
  • What if it doesn’t work as promised, what if it doesn’t meet the needs, what if purchasing from you is a waste of money, these questions are always in the prospect’s mind as they consider purchasing from you.
  • If you don’t eliminate these questions, it’s very likely that you will lose the sale.
  • But can you always make a sale just by answering all questions?

Risk Reversal

  • Risk Reversal is a strategy that transfers some or all of the risk of the transaction from the buyer to the seller.
  • Instead of making the purchaser shoulder the risk of a bad transaction, the seller agrees in advance to make things right if, for whatever reason, things don’t turn out as the purchaser had expected.
  • Take the bad end in this example, look around and you will see a lot of over the top offers, 12 month, 100% money back guarantee, no questions asked.
  • A customer can sleep on a bed for a year, and if he doesn’t like it, he can return it to the store and get a refund. Crazy, right?

  • It’s not crazy at all. This strategy eliminates the purchaser’s perception of risk, which is a major barrier to the purchaser.
  • If a customer makes a purchase and it doesn’t work out, they don’t have to feel stupid about wasting their money.
  • They don’t have to feel angry at the company or at themselves for making a bad decision.
  • All they have to do is, take advantage of the guarantee and return it, no big deal.
  • As a result, they don’t think too much and go through with the transaction.


  • Businesses survive by bringing in more money than they spend and there is no way to do that without completing transactions.
  • Adopting the risk reversal strategy is not always comfortable to the seller, as no seller wants to feel used or taken advantage of and it’s often easy to feel that way if a customer obviously gets value from the offer and asks for a refund anyway.
  • The difference is that the purchaser is purchasing from one seller but seller is selling to many purchasers.
  • Customers experience this risk on every purchase they make.
  • Since you are serving many customers you can spread the risk of return among many customers.
  • You might lose money on customers who are obviously taking advantage of your generosity, and that never feels good.

However, as a compensation, by eliminating the risk that every purchaser feels, you will close many more sales and come out way ahead in terms of total revenue and profit.

If you want to maximise sales, it almost always makes sense to offer a very strong risk guarantee and to extend the risk-free period as much as possible. If you don’t already have a risk- reversal policy, implement one, and you may see an increase in sales sooner.

Developing Trust

  • Just like we start trusting someone that we meet on a regular basis and share ideas and opinions with, the risk reversal gets you returning customers.
  • Get those customers to come together, share ideas and opinions on a common platform.
  • Your online followers, community numbers and participation is social proof of your consistent authenticity about what you do and how you help people.
  • This can be done relatively easily with a content strategy and editorial calendar of content that gets posted in a consistent manner.

In today’s world of internet, HyperEffects’  content and community engagement strategists help thought leaders connect and inspire with purposeful content strategies. Contact us for our one-hour free consultation session to understand the concept and incorporate it in better online engagement. We understand your world are here to help you become more relatable. This may increase your chances of connecting faster and with more impact than one who remains aloof and disconnected.

Hyper Effects | Grow Your Business

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