I can remember watching TV commercials as a kid featuring Ron Popeil and his amazing kitchen gadgets, and commercials for Ginsu knives with fascination. Not only were the products amazing they also seemed a bit unbelievable. They did so many things for so little money.
Of course other people were suspicious too and that was why these products always offered “free gifts”. The free items were there to enhance the already incredible value. But they were also there for an even more important reason: risk reversal.
One of the problems all marketers face is how to get potential customers to take the risk to buy the products they are selling. People don’t want to waste their money and they are skeptical. One of the smart marketers deal with this is to reverse the perceived risk by not only offering money back guarantees but actually making people better off, even if they don’t like their purchase, with items of value they get to keep. Thus, “if you don’t like it return it for a full refund – but keep the knives as our gift” tag line of all those early TV commercials.
This is powerful! The question is how can insurance agency owners make use of it? After all rebating premium, or giving gifts worth very much, is usually against the law.
One way to do this is to develop a basket of services, or inexpensive goods, that you provide to new customers that come with every new account. Even if the customer is unhappy later they get to keep those things. I’ve seen this work as a real value add in agencies. You don’t have to spend a lot of money to put things like iTunes gift cards, electronic devices, vouchers for restaurant meals and similar things in your basket. Promote its value and let people know that even if they try your agency and don’t like the experience they can “keep the knives”.
There are lots of ways to reverse risk, and it’s still an important psychological marketing tool even to today’s sophisticated consumers. What ways can you think of to reverse risk?