It is All About the Risk
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Sometimes it is so frustrating. You
know you have a better product than that which your prospect is
currently using. Your price is attractive, your service is outstanding.
If the prospect would switch to your solution, you know they'd be
delighted. You'd save them money, smooth out their processes, reduce
their inventory and generally make their life simpler.
So, why won't they switch? Are
people really that stupid? Or, is it you? Did you do something to put
While there are some circumstances
where the answers would be yes to the questions above, the most likely
answer is something totally different. The reason they won't switch is
likely not their IQ, nor your deodorant. It is the risk!
Risk is several things. First, it is
often the number one issue in the mind of the customer, particularly
when the account has no history with your company. That makes it the
number one issue to address in the sales process.
Risk is what the customer perceives
it to be. In other words, it's not anything quantifiable, like the
price or delivery of your offer. It's not objective or tangible.
Instead it is much more insidious, lurking underneath almost every
conversation between you and your customer. Because risk rises out of
fear, risk is often not mentioned. To acknowledge risk is to admit
fear. To admit fear is, in many people's minds, to expose weaknesses.
No one wants to look weak.
Risk is the answer to these two
1. "What happens to the company if
they make the wrong decision?"
2. "What happens to the individual
who is making the decision, if he/she makes the wrong decision?"
Risk is the combination of the
financial, social, emotional, and time costs that the company and the
individual decision-maker will bear as a result of making a mistake.
Here's how I help people in my
seminars understand risk. Two examples. Let's say that on the way home
tonight, your spouse calls you on the cell phone and explains that some
friends are coming over for the evening. You need to stop at the
grocery store on the way home and pick up some disposable cups so that
you'll have something in which to serve the drinks.
You stop at the grocery store, rush
in and see brand A and brand B. You select brand B, scoot through the
express lane, and arrive home just a few moments before your guests are
scheduled to arrive. Your spouse has a pitcher of Margarita's mixed up,
and you pour yourself one in the disposable cup you just bought. As you
raise it to your lips to take a sip, you discover a leak in the bottom.
You quickly grab another cup, pour the contents of the defective cup
into that one, and raise it to your mouth. Oops! A leak in that one,
too. One after the other, you discover that every one of the cups you
bought is defective.
Now, imagine yourself in this
situation. What price are you paying for your mistake?
I don't know about you, but in my
house, I'd be the recipient of some negative emotion from my spouse.
There would be a social and emotional price to pay. I'd also have to
invest additional time, running back to the store to fix the problem
with another bag of disposable cups. And, I'd have to pay for them, so
there would be some financial costs.
All of this over a simple little
purchase, at which you made a mistake. Even so, when you compare the
risk of this decision with all possible decisions you could make in
your life, this one has relatively little risk. Here's a simple
exercise to help you understand this concept. Draw a short vertical
line. At the top of the line write the number 25. At the bottom, write
the number zero. Now on a scale of 0 - 25, where would you put the risk
of buying a package of disposable cups? It's close to zero.
Now, let's compare that with a risk
on the other end of the equation. For a number of years, I had an
international adoption agency as a client. Consider a young lady in a
crisis pregnancy. What is the risk involved as she contemplates
releasing her unborn child to adoption? Certainly a lifetime of
consequences for at least four people. On our 0 -25 scale, most people
would rate it as a 25. This risk is at the opposite end of the spectrum.
The point here is that different
decisions carry with them different degrees of risk. Now, put yourself
in the shoes of the individual who is making the decision to buy your
products. What happens to that person, if he or she makes a mistake?
Now I know you are thinking that you
and your company will make it right, so that there really is no risk.
But that's your perspective, not your customer's. He doesn't know that
you'll make things right. Even if you say it, he still doesn't
necessarily believe it.
So, put yourself in his shoes, and
see the situation through his eyes. On the 0 - 25 scale, how much risk
does he accept when he says "yes" to you?
Here's an easy way of calculating
it. Just ask yourself what happens to that individual if you, or your
company, mess up.
Hopefully, you now have a different
perspective on that prospective customer for whom your pricing is
attractive, your product is better; your net impact on the customer
would be positive, but who won't buy. It's not about the price, it's
not about the quality, and it's not about the service. It's all about
If the risk to that person is high,
the way to make the sale is to reduce that risk.
Here are three strategies for
reducing the risk.
a closer personal relationship. The greater
the relationship, the less the risk. The lesser the relationship, the
greater the risk. That's why they would prefer to buy a less effective
product at a higher price from the salesperson who has been calling on
them for years.
Focus, not on reducing the price,
but rather in increasing the relationship.
2. Make the
deal tangible. The more vague and intangible
the purchase, the more risky. Take all the imagination out of the buy.
Bring them into your facility so they can see that you really do have
an office/production facility. Take them to a location where the
machine is being used by someone else. Hand them certificates of
warranty instead of just telling them. Show them pictures of the
product being used.
Look at every aspect of your offer,
and think about how you can make this piece more tangible and objective.
Proof. What is "proof?" Someone else, other
than you, saying something about your product, company, or service.
Proof is letters of recommendation from other customers, photographs of
other customers using your product or service, testimonials, case
studies, lists of clients, third party studies, copies of articles from
trade journals, etc. Anything you can find that in any way adds
substance by someone else, even if it is remote and only distantly
connected to your offer, will go a long way to reducing the risk.
The concept of risk and its role in
the buyer's mind is one of the most powerful concepts in the world of
B2B sales. Taking it into account and planning to reduce the risk of
every decision will be one of your most powerful sales strategies.
About the Author
Dave Kahle is one of the world’s leading sales authorities. He’s written ten books, presented in 47 states and eight countries, and has helped enrich tens of thousands of sales people and transform hundreds of sales organizations. Sign up for his free weekly Ezine. Check out our Sales Resource Center for 455 sales training programs for every sales person at every level.
You may contact Dave at The DaCo Corporation, PO Box 523, Comstock Park, MI 49321, or firstname.lastname@example.org
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Article Published/Sorted/Amended on Scopulus 2013-05-13 11:18:15 in Marketing Articles