How important is offering risk reversal for Shopify store owners?
91 percent of consumers interviewed in a recent Harris Poll said that a store’s return policy was an important factor in their purchasing decision and 89 percent of customers say they’ll revisit an online store after a positive returns experience.
With this in mind, having a well-thought-out returns policy clearly displayed on your store is key to not only attracting new customers but also keeping them.
Here’s the thing, most Shopify store owners are scared witless to push this method. But it’s practiced by the most successful e-commerce stores in just about every niche. And the good news is once you understand how to properly view the concept of “risk reversal”, it’s actually a profitable sales tool that will significantly boost your store’s conversion rate.
The goal with risk-reversal is to create offers that your prospects and customers simply can’t refuse. The key is to reduce their anxieties by taking as much of the perceived risk as you can off of their shoulders and placing it firmly on yours.
What you’re effectively doing is giving your buyers “decision insurance.” Here’s the thing, people desperately don’t want to make a buying mistake. In every buyer’s mind, there’s a voice whispering, “Sure it sounds good but what happens if I don’t like it/it doesn’t fit/it breaks/it’s not suitable?”
If you can make this voice disappear and eliminate any risk for your buyers, you will sell more, a lot more.
But it isn’t enough in today’s online retail environment to have a cursory returns policy. 14 or even 30-days to return a purchase can be viewed as stingy and creates a barrier to winning the sale.
E-commerce behemoths like Zappos.com give a full 365-days to return an item. What’s more, they offer free shipping and returns. This means anyone that buys from them risks absolutely nothing, not even the cost of shipping.
This is what I call a “Godfather offer,” one that customers can’t refuse.
Nordstrom.com have taken it a step further and don’t even impose a time limit on their returns, they just ask customers to treat them fairly.
Risk Reversal: Lowering the Barrier That Shoppers Must Jump Over
It’s a lot like how Amazon Prime has created a ubiquitous expectation in consumers’ minds to receive their goods promptly and with free shipping, e-commerce stores like Zappos.com have created an expectation of complete risk-reversal for online shoppers.
Because of this, you have to follow-suit and make it easier for the customer to say “yes” than it is to say “no.”
And the important thing to remember here is that—no matter what products your Shopify store sells—your goal is to start the buying relationship as quickly, and easily, and as painlessly as possible. It all comes down to a single moment of truth…
So ask yourself, “how can I make it easier for my store’s visitors to start the buying relationship?”
Think about the impact and the enhanced profits that a 25% increase in conversions would bring to your business without having to buy any extra traffic…
Quick scenario: Let’s say out of every 100 visitors, you are converting 4% into buyers. Now, what if you could lower the hurdle for new customers by reversing their risk and increase your conversion rate by 25%?
You’d gain an extra customer from every 100 visitors from the same marketing effort, the same traffic and the same ad cost.
But don’t stop there. What if you could persuade 25% more of your new buyers to become multiple product buyers? What if you could entice 25% more of your multi-product buyers to become repeat buyers?
And remember, your new found gains aren’t just for this year — they are for year after year. This is what risk-reversal is about and that’s why you absolutely must make it a central theme to your e-commerce business and marketing if you want to growth hack your way to 7-figures and beyond.
Use a Trial to Supercharge your Risk Reversal
If your products lend themselves to a free trial or risk-free trial, then this a rock-solid way to quash any anxieties or sales-objections.
An Audacious Guarantee Can Also Become Your USP
I firmly believe that if you’re not willing to put your neck on the line and offer a fair, strong and audacious guarantee on everything you sell, you need to find something better to sell.
Chrysler got Americans to buy their cars again with a 7-year/70,000 mile warranty which was the boldest guarantee in the car business at the time.
Domino’s Pizza guaranteed “hot, fresh pizza in 30-minutes or less or it’s free.”
Guarantees like these can double as your USP (Unique Selling Proposition) or “Value Proposition” as I call it. It can become what your company is most known for.
You Don’t Need to be Reckless to be Bold
Your guarantee and returns policy should have clout but it shouldn’t expose your business to unlimited liability. And that’s the beauty of split-testing, you can experiment with different risk-reversal mechanisms before you fully commit.
Like I said, you can build a huge brand off the back of a powerful and unique guarantee, just make sure you are 100% confident you can back up the promises you make.
Keep a watchful eye on your returns rate and costs whilst split-testing a new guarantee. If they shoot up disproportionately to your increase in sales then you may need to think again.
But in my experience, case after case has proven that the increase in conversions, sales and profits far outstrips any increase in returns.
In fact, zappos.com reported that its shoppers with the highest return rates actually make more money for the company than customers with lower return rates. Think about it, these are their most loyal customers who buy again and again.
Offer A “Lowest Price Guarantee” for Ultimate Risk Reversal
This is where you can “stack” the benefits of your guarantee. Not only can you remove all the risk from their purchase decision but you can also save shoppers the hassle of checking prices elsewhere.
It works by promising to match or refund the difference plus 10% of any cheaper competitor price.
Apathy plays a huge role here, shoppers trust that you check your prices against your competitors or your other customers will keep you in check. That trust means that they needn’t shop around so much. If you’re confident that your prices are better than your competitors, you can even test listing your top competitors’ prices on your product pages.
When I had my online garage door store, we offered a 110% price promise and in the five years that I ran that business, we had to invoke it just twice.
Boost Your Holiday Sales
Shoppers looking for gifts for their loved ones are easily put off if they have fears over getting the wrong thing and then not being able to return it. Because of this, it’s a good idea to offer an extended returns period during the holiday period if you currently offer a short time frame.
Stacking your guarantees adds extra weight to the offer and cements peace of mind for your shoppers.
It’s a great way to totally separate your store from your competitors too because it creates an offer that customers simply can’t refuse.
A stacked guarantee works because it reduces shoppers’ anxieties by taking as much of the perceived risk as possible off of their shoulders and placing it firmly on yours.
Put a Name to Your Guarantee
When your guarantee has a “handle” it becomes a thing rather than just a vague concept. This way it becomes a part of your value proposition and also makes it easy for your customers to refer to.
Use Your Guarantee to Reinforce Your Value Proposition
You should never miss an opportunity to restate the main benefits someone will get from purchasing from you or what makes you different. And since reading your guarantee or returns policy is an important part of the “persuasion equation” for many online shoppers, it’s the perfect place to do it.
Bold Guarantees Take Guts to Implement
The payoff to being gutsy is that you convince more visitors than ever before that you’re the most logical choice for them to buy from. Think about it, let’s say your returns rate is 5%, even if it doubles to 10% (which is unlikely), you’re still way ahead if you’ve boosted your conversions by 25%.
So, don’t underestimate the power of a “guarantee with guts,” people admire and respect business owners who stand behind their products without “weasel clauses” and small print. It makes them want to do business with you, don’t you think?
But there is something else, the stronger your guarantee, the less likely your competitors will rush to match it. This puts your business in a powerful position as the only ones in your market who can make that particular promise.