144 Year Old Example of Risk Reversal
I love shows like The Luxury Channel (via CNBC Australia on Foxtel) with stories about luxury goods, places and experiences from around the world.
Recently there was a story about the exclusive St. Moritz in Switzerland — especially its very famous winter season — the people, activities and stories.
In the report was the history of the luxurious and palatial Kulm Hotel, and how the winter season got started: with a ‘risk-reversal’ advertising guarantee! They didn’t describe it that way (it was called “a bet by the owner”) — but it was a very clever ‘risk-reversal’ guarantee.
Risk-reversal is where the perception of “risk” to the buyer is reduced because of the use of a particularly strong guarantee by the seller — helping increase response, as the buyer feels the seller is putting the onus on themself with an offer that is more favourable than usual to the buyer.
Confused? What that really means is this: the seller makes the offer more tempting by being willing to provide a strong guarantee: the buyer feels less at risk of losing out in some way by accepting the offer.
In the case of St Moritz’s winter season, as reported on The Luxury Channel, way back in 1864, Johannes Badrutt, the owner of the Kulm, offered this guarantee to British tourists to tempt them to come and visit St Moritz during winter:
That if it’s not true what I’m telling you — that it’s wonderful here during the winter time — then I will pay for your trip and for your stay.
That’s a confident guarantee — he’s so sure the buyer will love the place, that if they don’t, then they don’t risk any money because he’ll meet the cost of the trip and the stay.
Would you, as a tourist, now be more willing to give St Moritz a go, knowing that there was no money risk to do so?
It certainly worked — no such guarantee would be needed nowadays to get people to such a famous destination (as pictured looking at the Kulm Hotel in winter, above).
And it was certainly more “gutsy” back then to offer the guarantee, given there was not yet any winter activities at St Moritz — and visitors often stayed for quite a long period.
Nowadays we often see risk-reversal used to sell events such as big seminars — you’re guaranteed that if you get to a certain point during the event, decide it’s not worth it, the seminar host will meet the cost of both the event ticket and $500 in bona-fide travel expenses (or some variation of that kind).
Doing that implies you are confident of your product — which is another good way to improve your response. Of course, you better have a good product to ensure your guarantee doesn’t backfire.
What can you do in your business to create a risk-reversal guarantee to help improve your response?
PS: The Kulm Hotel people seem to have always had good marketing sense … the going rate for the Presidential Suite for one night is currently US$5,300, and the hotel was Switzerland’s first ever building to have electricity.
Check Your Messages Make Sense
Online selling platforms like eBay include some great automation tools, as eBay magician Matt Clarkson pointed out on the weekend at the eBay workshop he and wife Amanda presented on the Gold Coast.
For example, Selling Manager Pro includes a handy feature to help automate the messages sellers can send out during the buying process once an item has been sold.
I got one of these emails today from a seller, for an item I purchased for my wife Mel on the weekend.
It started like this:
Subject: Thank you for your payment. eBay item #____________ “name of the item”
Dear (eBay user),
We hope you enjoy your purchase. Your payment has been received for the following item:
(A table showing the Item title, Web Address, Item number, Buyer User ID, Seller User ID and total price.)
Thank you very much. Your business is much appreciated.
Please send payment for eBay purchase.
I accept the following payment method: PayPal, Money Transfer, Money Order/Cashiers Cheque
Please go to the URL below to complete payment: (linked eBay payment address)
Did you notice the error?
First of all, it starts off by saying thanks for my payment. That’s a good automated email to send as a courtesy, which establishes a little rapport (even without a personalised message).
And then it describes the payment received and the related item.
That’s great too — confirmation I did pay for the correct item as a buyer.
But then, it falls apart.
The message tells me to send payment, the acceptable payment methods and a link to paying via eBay.
I’ve already paid! So asking me here to pay again doesn’t make any sense. (For some inexperienced users, that may cause confusion and affect the buyer-seller relationship).
In fact, it would have been better from a marketing perspective to have a link back to the seller’s other items (or their store if they had one — in this case they do have an eBay store) … to encourage further purchases.
If you’re going to use automated templates (or any other manual or sequenced series of messages), make sure you check and verify yourself that the messages make sense from the buyer’s point of view.
Target Your Click Throughs Carefully
With ad services like Google Adwords, having control of the page a viewer sees once they click on your ad means you have the advantage of presenting a targeted message.
One of the worst mistakes you can do is to create a compelling headline and brief description, and then just send someone to an all-encompassing home page — that momentum is lost and a visitor is often confused by their choices.
The message on the home page — unless you have a very lead-generation specific website with only one presented message — is not often an extension of the ad message that had the visitor interested enough to click in the first place. That confusion is a “road block” to converting that visitor to your objective.
So it makes sense that the page they see accurately reflects the advertising message … you should use a page that specifically meets this purpose.
However, be careful to TEST that it works!
I clicked on an ad on a web page yesterday (from within Google Mail) … for a bookkeeping company. They had created a specific page for that ad. However, the page I saw had this message:
You are not authorized to view this resource.
You need to login.
Oh no … lost sale. Road block. Crash. Wasted money spent on that click!
Most likely, the person creating the ad landing page was logged in, and didn’t even realise the potential for this type of error. How much money will they waste until they realise this problem?
Admittedly, some visitors may then use the navigation to click on the home page and track down what they were after. But you’re at the mercy of their resourcefulness, and that’s a dangerous place to be, especially when your home page is not prepared to carry that same targeted message.
So … don’t just use your home page as an ad landing page, unless it is very consumer targeted. And make sure that if you do have a specific page, you logout of your web content management system and test the page just as a visitor would see it!
Yellow Pages
Mal Emery has published an outstanding article about the right way to use Yellow Pages, in his latest Rebellious Rant.
I’m not just saying that because Mal has recommended his clients and subscribers contact me for a “done for you” Yellow Pages service!
It’s because Mal is sharing great advice about maximising the impact of your Yellow Pages ad and making it up to 750% more profitable.
Like Mal says, 60% of those who consult a category in the Yellow Pages, have NO company in mind — and of the other 40%, around one third (13%) are will to be swayed … that’s a chance at persuading more than 7 in 10 readers with an effective ad.
The regular Rebellious Rants are a great free resource for any entrepreneur or business owner, well worth a free subscription!
Bargains in misspellings
I just watched an auction end online for a brand new pair of men’s workboots … a brand with an excellent reputation … being offered for $15 — $100 below retail!
Number of bids?
Zero. No sale!
Here’s a pretty good reason why … the boots were advertised as “Bloodstone Workboots” — but the actual brand is Blundstone, not Bloodstone.
Now there’s always been a market on sites like eBay to find a bargain via misspellings — whether a typo or simply the seller not knowing the correct spelling!
I know for sure that typo’s slip through my fingers more than I’d like, and I don’t profess to be a leading authority on spelling and grammar (an aside: why isn’t grammar spelled “grammer”, like hammer or stammer?).
If I was a smart seller, I’d at least do my research to confirm the right brand name. I’d also include the common misspellings in my listing, so it’s more easily found by people who don’t know the correct spelling when doing their search (especially on eBay when they search title and description).
Of course, if I was a smart buyer, I’d be searching on misspellings to find bargains like a pair of brand new top brand workboots for sale at $100 less than retail with 0 bids!