Psychology · Rr
Risk
reversal.
Risk reversal means taking the risk of a bad purchase off the buyer: a guarantee, a generous return policy, a free trial. Research on return policies suggests more lenient terms lift sales by more than they lift returns. The catch is putting it where the buyer is actually hesitating.
Written by Dan Picken, a marketer applying published research. Last checked 27 October 2026.Before
Add to cartReturns policy
After
Add to cartFree 60-day returns. No questions.
Example. Same policy, moved to where the decision happens.
What the
research says.
Evidence: StrongConsistent across the studies reviewed, though the size of the effect depends on the product and the terms.
A review of 21 studies on return policies, published in the Journal of Retailing, found lenient policies increased purchases, and raised returns by less. Longer return windows actually reduced return rates.
The likely reason: a generous policy lowers the risk of saying yes, and a longer window takes the pressure off, so people keep what they bought.
Economists have a second explanation. A guarantee is a signal: a business with a poor product would face more returns, so offering one is costly unless the product is good. Moorthy and Srinivasan showed money-back guarantees can signal quality, sometimes better than price can. Buyers read a strong guarantee as confidence.
Online, Google can show your returns policy before anyone reaches your site: it may show your general return policy on your ads and listings. A generous policy works as risk reversal in the search results, not just on the product page.
In Australia, there's a legal floor under every guarantee. The ACCC says a business warranty is in addition to the consumer guarantees and can't replace or limit them. Good risk reversal goes beyond what the law already gives the customer, and says so plainly.
In your
marketing.
Product pages
Put the returns policy next to the buy button, not in the footer.
E-commerce
Service pages
Say what happens if it goes wrong: 'If it's not fixed, I come back free'. Only if you mean it.
Trades
Lead offers
A free audit or trial lowers the risk of the first step. 'Keep it either way' helps more.
B2B
Where it backfires
A guarantee with so much fine print that nobody believes it. And Australian Consumer Law guarantees apply anyway, so don't present those as a bonus.
All
Vague promise,
real reversal.
A guarantee only reverses risk if the buyer can picture claiming it.
| Industry | Vague | Specific |
|---|---|---|
| Trades | 'Quality guaranteed' | 'If anything we did isn't right within 12 months, we come back and fix it free' |
| E-commerce | 'Easy returns' | 'Free returns within 60 days. Print the label, drop it at any post office' |
| B2B | 'Satisfaction guaranteed' | 'Cancel in the first 30 days and we refund the setup fee' |
| Services | 'We stand behind our work' | 'Miss the agreed date and we take 10% off the invoice' |
Try it
Draft a guarantee
you can keep.
Pick the fear that stops most of your buyers and how long you'll stand behind it. You get plain-English wording to start from. Only promise what you'll actually honour.
Draft wording
Australian Consumer Law: the ACCC says a business warranty is in addition to the consumer guarantees and can't replace or limit them. Never word a guarantee so it sounds like customers have fewer rights than the law gives them. A marketer's draft, not legal advice.
Try this
Put your guarantee or returns policy next to the buy button.
It backfires when
The guarantee has so much fine print nobody believes it.
In my experience
On most sites I audit, the returns policy or guarantee already exists. It's just three clicks away from the moment someone hesitates, tucked in the footer. Moving one line next to the buy or enquire button is about the cheapest test you can run.
Test it on
your own buyers.
- 1
Name the fear
Ask sales or the front desk what stops people saying yes. That's the risk to reverse.
- 2
Make it specific
Say how long, what happens and how to claim it, in one sentence.
- 3
Put it where they decide
Next to the price or the button, not in the footer.
- 4
Track claims and sales
The meta-analysis found lenient policies lifted purchases more than returns. Check that holds for you.
Questions
people ask.
Will a generous returns policy just increase returns?
The research reviewed found purchases rose by more than returns, and longer windows reduced returns. Test it on your own numbers.
What if I sell a service, not a product?
Reverse the risk of the first step instead: a fixed-price first job, a free assessment, or a clear promise about what happens if it goes wrong.
Do return policies increase sales?
Usually. A meta-analysis of 21 studies found lenient return policies increased purchases more than they increased returns, and longer return windows actually reduced return rates.
Can my guarantee say no refunds?
Not in a way that removes customers' legal rights. The ACCC says consumer guarantees apply automatically and can't be taken away.
What is the best guarantee to offer?
The one that answers your buyers' biggest fear and that you can afford to honour every time. A broken guarantee costs more trust than it ever won.
Keep going
Where is this costing
you sales?
Takes a minute. Audits come back within 1 to 2 business days. For anything else, I'll get back to you as soon as possible.
What happens next
- 1I'll ask for read-only access, or just your website for a search audit.
- 2I go through it and write up the 3 biggest fixes.
- 3A 20-minute call to walk you through it. No pitch unless you ask.