A recent advertising campaign by an Australian bank, aired on television, assured no waiting at the bank. The campaign stated that if a customer were kept waiting for longer than five minutes, the bank would compensate the customer with $5.

This guarantee is specific and unequivocal, leaving no room for misinterpretation. The concept of risk removal has also been employed with remarkable success by home shopping businesses. These companies sell an extensive array of products, ranging from exercise machines and skincare items to dietary supplements and home care products. Invariably, they offer a striking risk removal proposition, such as:

"Test our product for 30 days, and if you are satisfied, send us a cheque. If not, return the product and owe nothing."

Undoubtedly, you have encountered such advertisements before. Interestingly, the average return rate for these companies is less than 5% of all products sold. It is improbable that these businesses would achieve their current sales volume without offering risk removal.

Another example is a bedding retailer who proclaims, "Should one of our competitors advertise the same item at a lower price within 30 days of purchase, we shall refund the difference plus 10%." The statement is unambiguous. Additionally, consider the tradesperson's enterprise that declares, "If we are not punctual, we will provide you with $50." This, too, is explicit.

Risk removal is fundamentally about alleviating customers' doubts when contemplating the purchase of a product, essentially removing barriers to the sale. Employing this tactic can significantly increase sales.

Undoubtedly, your business strives to offer exceptional service and quality, and you likely believe that it provides the best value for money in your sector. In that case, why not guarantee it with confidence?

If you are concerned that people may exploit this policy, rest assured that you are not alone. This fear is the most prevalent reason businesses are hesitant to implement risk removal. While it is true that some individuals may seek to take advantage, they are a small minority. Suppose 10% of the population is dishonest and intent on defrauding your business. In that case, it would be unwise to make a decision that adversely affects the remaining 90% of potential customers by not offering them risk removal.

Moreover, presenting a conspicuous risk removal offer, like the examples previously mentioned, could potentially attract significantly more business than you currently enjoy. The benefits of offering risk removal far outweigh the minor expense of refunding money to the occasional individual who illegitimately claims it.

Devising an appropriate guarantee for your product or service is contingent upon the nature of the product or service you provide.

A pet shop in Victoria offers a "cockatoo guarantee." If the purchaser of a bird loses it for any reason whatsoever, the shop will cover the first 50% of the replacement cost. Are they irrational? On the contrary, they are rather astute.

By providing this form of risk removal, customers are assured that when they purchase a bird from this establishment, it will be a long-term companion. Even if the bird perishes or escapes, they are aware that they can return to the shop and obtain another while the shop contributes to half of the cost.

The shop owner recognises that they have secured a lifelong customer. Even if the unforeseen occurs, they will receive 50% of the standard sale price of a new bird. Although they may not profit as much as they typically would from a sale, it is crucial to consider that they have re-engaged the customer with their establishment. The customer has not sought an alternative provider. Furthermore, it is likely that the customer will make additional purchases at full price while visiting the shop.

Determining the appropriate risk removal for your business is relatively simple, as your customers can guide you. To ascertain their primary concerns, you merely need to inquire about their key frustrations.

In the case of the bank, customers are often frustrated by the waiting times they experience. With home shopping, customers might find the product unsatisfactory or unsuitable after purchasing it.

A lawnmower supplier in Sydney offers a 30-day money-back guarantee, with no questions asked, to any customer dissatisfied with their lawnmower purchase. A video movie retailer guarantees customer satisfaction with the purchased movie—or the customer receives a refund.

Just as the aforementioned businesses identified their customers' frustrations, you must investigate the concerns your customers may have when dealing with your type of enterprise.

Consult your colleagues or friends about their frustrations with businesses in your industry. To obtain accurate answers, have someone anonymously ask your customers, imploring them to be brutally honest. Do not take their responses personally; instead, use them as valuable insights and opportunities to improve your business.

Bear in mind that risk removal can be applied to various aspects of a business, such as timeliness, quality, delivery, service, price, appearance, and usage, to name a few.

Your business might require distinct risk removals or guarantees for different products or services.

This approach represents a slightly different form of risk removal. Although not precisely a guarantee, it constitutes a strategy designed to encourage customers to commit to a purchase by eliminating perceived barriers or fears that prevent them from making a purchasing decision. This method can be implemented in nearly any business, particularly those that require providing quotes before customers make purchases, which is the case for most businesses.

Examine the reasons why potential customers are interested in doing business with you but ultimately decide against it. Identify their concerns regarding commitment and investigate whether they feel they are not receiving the desired value. For instance, they may establish a relationship with a preferred associate only to see that person leave the company. Consequently, they may worry that they will not receive the same level of service from other representatives within your business. By devising ways to alleviate those fears and enhance value, you will likely observe a significant increase in your conversion rate.

• Financial risk
• Inventory risk (particularly when engaging with other businesses): the risk of merchandise failing to sell, the risk of items being damaged, the risk of stock expiring, the risk of business closure
• Value
• Relational risk

Prior to determining the risk removal to offer your customers, it is crucial to evaluate its potential impact on your sales.

Bear in mind that the primary objective of risk removal is to persuade a customer to make a purchase or eliminate the barriers they encounter when deciding whether to buy. Does your risk removal achieve this goal?

If the risk removal sounds appealing yet fails to encourage a purchase, reconsider your approach. Identify the factors preventing potential customers from buying from you and endeavour to eliminate those obstacles.

What if the issues the customer encounters are attributable to their own actions? What if the customer is at fault? They may have misused the product, neglected to read the instructions, or simply been careless. Why should you bear the burden of such occurrences?

This is a valid point and one that is often raised.

Let us return to the pet shop example. This establishment guarantees their birds, or they cover the first 50% of the replacement cost. If a customer inadvertently leaves the cage open and the bird escapes, the shop will provide the first 50%.

They have addressed this concern by making their guarantee conditional. In other words, they have established the terms. They do not promise to pay the full replacement cost, only 50%. Even if the customer is in the wrong, the shop will readily honour their risk removal offer. Consider the positive impact this has on the customer's experience; the shop has secured a lifelong customer!

Another example is a home beer brewing company. If a customer returns, claiming that the beer did not turn out as expected, the company does not retort, "Well, it is your fault. If you had read the manual, you would have known not to do that" (which would result in an irate and embarrassed customer). It is also abundantly clear that the customer will never purchase from them again and will likely share their negative experience with numerous friends. Instead, the company responds, "We apologise that this hasn't worked out as you intended. Let us replace the kit and offer you some guidance on how to brew the beer properly next time."

The company recognises that without this form of risk removal, they would never secure repeat sales from that customer. It is reasonable to assume that if one customer encounters difficulties, others will too, resulting in the loss of repeat sales. Indeed, if a significant percentage of customers face issues, there may be a problem with the instruction manual.

Regardless of the reasons, a business without a risk removal policy will struggle to secure repeat customers. The business would be forced to continually acquire new customers, which is often the most expensive marketing approach.

Would it not be more advantageous for the business to retain more clients by guaranteeing the beer's success and providing those customers with a new kit alongside clear explanations of how to improve their brewing process? Undoubtedly.

Consider the downside of not offering risk removal: the number of customers who may choose competitors, the cost of generating new leads, and the challenges in converting enquiries. Then, examine the impact of occasionally fulfilling your guarantee. There is no contest.

Offering risk removal to your customers will undoubtedly place you in a more advantageous position.

It is crucial to acknowledge that providing risk removal might have a considerable impact on the pricing of your products or services. It is essential to remember that consumers pay for perceived value.

If you have eliminated the risk associated with procuring your product or service, would individuals be willing to pay a slightly higher price for it? Does your offering appear to be more valuable? Indeed, in numerous instances, people are prepared to pay substantially more for an identical product or service due to the presence of a "guarantee".