What is risk reversal?

All business transactions contain some kind of risk. If you ask a potential client to take on all the risk in a transaction, their first inclination is not to buy. What if something goes wrong? They’ll be the ones who lose. But take away all the risk for your prospective client and you’ve eliminated the primary obstacle to buying. Instead of a reason to say “no,” they only have reasons to say “yes.” That’s what makes risk reversal such a powerful tool: it makes it so your client literally has nothing to lose because if they are dissatisfied, you will do whatever it takes to demonstrate your complete commitment to their satisfaction. Maybe this is giving them their money back or re-doing the job at no charge. Your business likely offers a form of risk reversal to your clients right now, but chances are that you don’t have risk reversal at the heart of your selling message.

Here we’ll cover why risk reversal works and best practices to incorporate one of Jay Abraham’s favorite, powerful sales tools that can improve your business anywhere from 40-400%.

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The heart of risk reversal: the guarantee

At its core, a guarantee is a promise that your product or service will perform as promised. A good guarantee takes all the risk away from the client and puts it on you, the seller. One key element in crafting a guarantee is to have a specific vision of what result(s) your client wants from their purchase. Then guarantee that outcome or their money back. It’s that simple to eliminate their risk.

However, for many of us, a basic guarantee is just that: basic. In business domains with keen competition, you need a better benefit than a basic guarantee to stand out. Jay calls this the “better-than-risk-free” (BTRF) guarantee. This next level of risk reversal acknowledges and rewards your client for the value of their time and faith in purchasing from you. This means not just giving them their money back, but promising an additional reward that compensates for them having taken the time and effort to purchase from you. Who can say no to something like that?

Jay has used BTRF for his own live events, letting people preview his methods via videos, audio recordings and in writing before they even signed up. Those who did sign up received $5,000 worth of materials six weeks before the event that they were encouraged to read, listen and watch, then apply to their business. If they didn’t see results, they could cancel their attendance and keep a significant portion of these materials. But it goes even further: once people came to the program, they could attend up to half of the program before Jay considered their commitment binding. So if by early afternoon of day two of a three day program someone felt they had not received over $5,000 in value, they were welcome to leave with a full refund, no questions asked and no hard feelings. Tony has a similar policy for his live events; for example, people who feel that they’ve not received $1 million dollars of value after attending the first full day of Business Mastery can easily get a full refund. Other examples of this kind of better-than-risk-free guarantee include double your money back or receiving a bonus with purchase the client can keep even if they ask for a refund.

Compensating your clients for their dissatisfaction is the core of a better-than-risk-free guarantee. Though these guarantees are seldom used, they create an extremely powerful advantage for your business over your competition.

How does risk reversal work to increase sales?


The automotive industry has done years of research to understand why people buy and not buy. The biggest discovery is that people don’t buy because we don’t want to make a mistake that makes us look bad to our peers. But risk reversal means that it’s now impossible for your clients to make a harmful mistake. They also won’t look bad because they can get out of their purchase if it doesn’t perform as promised.

risk reversal psychology

Draws clients to your business

utilizing risk reversal to draw clients to your business

When your business takes on all the risk, you’re telling people just how strongly believe in their satisfaction. No wonder prospective clients will want to see why you’re so confident! Here’s an example. Some parents want to buy their kids a playset for their backyard, but they’re not sure the kids will actually use it enough to justify the cost. They find the same one being sold at two different stores: at the first, the playset costs $500 with free home delivery. At the second, the playset costs $750 but the store has a free trial period of 45 days: they’ll deliver and set up the playset, then let the kids use it. At the end of 45 days, the parents can either pay the $750 or have the store come pick up the playset for no charge, no questions asked. Which would you choose? (We bet it’s the second one.) That’s the draw of quality risk reversal.


Strengthen your unique selling proposition (USP)

An increased guarantee is often an excellent addition to your unique selling proposition (USP). Offer your client specific outcomes or results and you’ll normally perform even better to exceed those expectations. Your client ends up with better-than-expected levels of service, performance and quality and you end up with a raving fan for life. For example, one of Jay’s past clients was an architect that offers a simple pledge: if his client is unhappy at any stage of the project, the architect refunds previously paid fees and redoes the unsatisfactory work for free. Using this promise as a keystone of his USP caused his business to thrive. An increased guarantee frequently results in increased profits.

unique selling proposition

Risk reversal best practices

Make promises you can keep

Start out by making a list of all the different ways you can 100% guarantee, better-than-risk-free guarantee or at least partially guarantee your client’s transaction. If you can’t offer a complete refund, what value can you add to offset your client’s potential risk? Risk reversal is a method of cementing customer confidence, so make sure you only promise what your business can actually deliver.

Be concrete and detailed

Instead of “satisfaction guaranteed,” what if you say “unconditionally performance-guaranteed for 30 days”? That already gives a better idea of what the client can expect, but it can go further. What about a skincare brand that promised “100% money-back, 90-day guarantee if you can’t honestly state your face looks more youthful and radiant with more even color and elasticity. If you don’t enjoy results this good or better within the first 90 days of using our product, we don’t deserve to keep your money. You have every right to ask for a full, no-questions-asked, on-the-spot 100% refund anytime you decide.” See how the details underline what we can expect from this brand’s products?

make risk reversal promises you can keep

paint a picture for effective risk reversal

Paint a picture of satisfaction

Define and explain exactly what satisfaction will look like for your client. Details about performance or specific results, like in the skincare example above, allow your client to understand they have a greater risk not buying your product or service. Remember that clients are not buying a product or service; they are responding to the advantages your product or service will produce for them. So help them clearly focus and appreciate exactly what that result should be. The more specifically you tell people what “satisfaction” looks like, the more compelled they become to act in order to receive that benefit for themselves.


Understand your clients’ obstacles

When developing your business’s risk reversal strategy, start by making a complete list of every barrier to your clients choosing you over your competition. Once you have this list, break these obstacles into these categories:

  • Financial obstacles: These can include the initial costs of doing business with you or financial loss if the transaction doesn’t work for your client.
  • Emotional obstacles: How bad would your client feel if the purchase or commitment with you fails to perform?
  • Measurability: Is it possible to tangibly measure the impact your offering can have on the client’s life or business? What metrics of measurement and evaluation will your clients use to judge their satisfaction level?

use risk reversal to avoid financial obstacles

utilizing time for risk reversal

Give them more time:

We’ve all had experience with basic 30-, 60-, 90-day money-back guarantees. Jay’s found that the more time you give people, the more likely they are to buy. So usually a 60-day guarantee will outproduce 30 days by 20%-100% while full year or even longer usually beats 60 or 90 days.

Test, test, test:

When looking to leverage the best risk reversal method for your clients, test which guarantees are the most attractive to them. Small tests can yield rich information and results you may not have expected. Try it out with a few prospects or clients. Or ask one salesperson to try it for a day or week or in one market to see how much better clients respond before you incorporate it continually or system wide. For example, Jay worked with a health club that tested out four different guarantees for new members: trial periods of 30, 60 or 90 days risk-free plus a fourth option that added a written agreement guaranteeing the specific result the client wanted (e.g., lose 23 pounds of fat and turn it into rock hard muscles within 120 days). The free 60-days outperformed the other three tests by a large margin, with nearly 50% of these new clients converted into paying memberships. But the specific results guarantee also worked better than those without specifics. Testing a range of guarantees will ensure you end up with the best version of risk reversal possible for your clients.

Don’t give bogus or frustrating guarantees:

How many warranty cards have you actually mailed in? We can’t remember either. Many businesses offer pseudo risk reversal policies that actually keep the risk squarely on the client. If your guarantee has high barriers to entry, you’re likely to turn clients off instead of keep them coming back. Take a candy bar maker who guaranteed satisfaction with their product, but required customers to mail in the uneaten portion along with their complaint. The cost of postage was almost as much as the candy and you wouldn’t even get your money back – you’d just get another of the same candy bar. How frustrating is that? Compare this to a large power equipment company that guaranteed clients five working days after receiving any large piece of power equipment to bring it back for a 100% refund, no questions asked. In five years, they only had three people ask for the refund while seeing a 300% increase in sales.

avoid frustrating guarantees in risk reversal

What will risk reversal cost my business?

If you’re worried that switching to aggressive risk reversal will cost you a lot of business, stop worrying. Unless your product or service is flawed – or just plain does not perform for the client – the number of people taking you up on a refund guarantee is negligible. But the increase in people taking you up on the initial sales offer is anything but negligible. Jay’s seen strong risk reversal double and triple sales while only adding ½%-3% in additional refunds to a company’s numbers. (By using the testing strategy you can quickly, safely and definitively determine the difference risk reversal can and will make, which is why you should always test first.)

When there’s no risk in doing something, many more people tend to give it a try. Once they try it out, if your product or service performs as you say, most people will continue buying again and again. So if you provide and deliver true quality and value that can be appreciated, perceived, and understood, don’t be afraid to offer risk reversal and see your business boom.


Jay Abraham

About Jay:

Jay Abraham is a proven business leader and top executive coach in the United States, and a close friend of Tony Robbins. Jay has spent his entire career solving complex problems and fixing underperforming businesses. He has significantly increased the bottom lines of over 10,000 clients in more than 1,000 industries, and over 7,200 sub industries, worldwide. Jay has dealt with virtually every type of business scenario and issue. He has studied, and solved, almost every type of business question, challenge and opportunity. His principles can be the difference between mediocrity and a business that generates millions of dollars in additional revenue.

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