Minimum Risk at Office Max (aka: Risk Reversal)

I love places like Office Max and similar: so much great stuff useful for home business operations: envelopes, paper, printers etc. I would buy so much of that stuff…

But hey, how do they keep making money? Let’s have a look at one example.

I brought some stuff to print at Office Max and they gave it back to me in a box with the attached writing: “On time or it’s FREE”. This is called “Risk Reversal” and it’s a very powerful business acceleration principle.

The theory is pretty simple, yet profoundly effective: every time two entities have any kind of relationship (business but also friendship, sentimental etc) one is asking the other to assume part of the risk, all of the risk or more of 100% of the risk of the transaction.

Let’s see, for example, in the case of copy service at OfficeMax. If I have to make copies, and I bring them to Office Max I am taking a risk: what if they are sloppy? What if they are late in delivering it? This might be for a work presentation… In this case, Office Max is actively working to take 100% of the printing risk: if they are sloppy, they will absorb the cost.

Is this mechanism effective? Absolutely yes. If I have the choice between 2 printing centers and one is offering “Risk Reversal” like Office Max, they get my business.

This is just the first example we analyse of Risk Reversal: many more will come to these pages in the future.

For those of you that are avid readers, you might want to pick up the great book from Claude Hopkins “My Life in Advertising”, where he talks about the many successes he fostered based on this principle. Surely the book is somewhat dated (beginning of 1900) but it is still incredibly modern: as Mr. Hopkins himself writes, human nature does not change, these principles are immortal (although their application will have to adapted to the current media).

Till next time

K in China at 28k modem