August 3, 2017
2 min read
I can remember being fascinated as a kid watching TV commercials featuring Ron Popeil and his amazing kitchen gadgets, and especially commercials for Ginsu knives, featuring Mr. Becher and Mr. Valenti. Not only were the products amazing–they also seemed a bit unbelievable. They did so many things for so little money. See for yourself here!
Of course, others were a bit suspicious too, and that’s 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 aversion reversal.
The Problem: Getting Customers to Take a Risk
One of the problems all marketers face is how to get potential customers to take the risk to buy the products they’re selling. People don’t want to waste their money and they’re skeptical. One of the smart ways marketers deal with this is to reduce and 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” tagline of all those early infomercials.
This worked–over three million sets of Ginsu knives were sold between 1978 and 1984! The question is: How can insurance agency owners make use of this tactic? After all, rebating premiums, or giving gifts worth very much, is usually against the law.
The Solution: Value-added Items
One way to adapt this method to insurance agency sales is to develop a basket of services or inexpensive goods you provide to new customers 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 downloadable music 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 a potential customer’s aversion to risk, and it’s still an important psychological marketing tool even with today’s sophisticated consumers. What ways can you think of to change their thinking?