Sales Laundry

Before a decision to purchase is made, be it a newspaper or multi-million dollar project, a buyer has to evaluate the risks of making that purchase.

The basic types of risk are:

1. Physical Risk – The risk of injury by using the product or making the purchase.

2.Financial Risk – The chance you could lose money, or have to repair or replace an item.
3. Functional/Time Risk – The risk the item will not perform as expected or deliver the benefits promised or risk related to the passage of time and the possibility of rapid obsolescence.
4. Social Risk – The risk associated with what friends, co-workers, the boss, a spouse will think and do if a purchasing decision is made, including the risk of being fired from a job based on a purchasing decision. Hence the old tagline “Nobody ever got fired for buying IBM.”
5. Psychological Risk –The risk of experiencing “buyer’s remorse,” feeling bad, feeling guilty or other negative emotions for making a purchase decision.

All five of these risks are part of every purchasing decision. How you build your case to offset these risks for your buyer will determine how likely and how successful you are at closing the sale.

Bob Taska, a world class customer service driven car dealer, in his book “You Will Be Satisfied” took an interesting approach to eliminate some or all of all five risks when the quality of cars coming from Lincoln-Mercury were showing up on his lot with more than a few defects attributed to poor assembly from 1967 through the early 1980′s. He began a practice of what he called “blueprinting” the new cars, or rebuilding each car to the manufacturers design specifications. He advertised and sold his “blueprinted” cars at a 5% premium to cover his costs, developed a unique product, eliminated the risks associated with buying a Lincoln-Mercury at the time, developed a loyal following, and earned enough credibility to sell his cars from that point forward without the typical haggling associated with a car purchase.

Assess the Risks of Doing Business with You

Take a step back and look at your company, your brand, your products, your service, sales team, your overall reputation and what your customers are saying, accurate or not, identifying your strengths and weaknesses in each risk category from your perspective. Then repeat the exercise from a customer or likely prospects perspective.

Depending upon your sales cycle, you may want to look deeper than just the prospect you are meeting with. Will your prospect need additional risk mitigating information to defend his or her purchasing decision or materials they can use to help sell your solutions internally to people you may or may not have access to?

It would be a mistake to lump your company, your staff and your products together as you make your assessment. Weigh each one (Company, Product Category, Team, Product) separately to get a more honest assessment as strengths in one area may offset weaknesses in other areas.

Example 1: The strength of the IBM brand could offset some of the risk associated with a new, never heard of computer product. On the other hand, the IBM name would not carry much weight if that new product was a loaf of bread.

Example 2: A trusted sales professional could add credibility to a product with his long term clients by putting his/her stamp of approval on the product just as a less-than-reputable sales professional could add so much risk for a potential prospect that they would not even want to hear about the product.

Example 3: Toyota’s strength in building quality cars and being dominate in the electric/hybrid car category, thanks to the Prius, would most likely offset some risk associated with a brand new electric/hybrid car.

Example 4: The (social) risk I place on buying a $10 toy for my daughter is medium because I am concerned about buying something she will like, that will not be a waste of money (financial risk – medium.) The risk my 8 year old daughter places on buying a $10 toy is high, because it takes her a while to earn $10 (financial risk – high) and she has few opportunities to go to the store and shop (psychological risk – medium to high, functional/time risk – high,) and her friends might make fun of her when they hear about it (social risk – high) so it takes her a long time to make a buying decision. If there is a Pogo stick or Rollerblades involved, now there is physical risk to contend with as well.

How Risky is it to do Business with You?

Risk is part of life and certainly part of the purchasing decision. Take the time to make an honest assessment of the risks of doing business with your company from the prospects perspective and uncover the areas where you might be vulnerable.

What can you do to eliminate the risks associated with your products or services? How can you add enough “credibility” to your new company to outweigh the risks of doing business with you vs. a name brand leader in your field?

I would really like to hear what you come up with. Need some ideas? I am just a quick email away val {at} saleslaundry.com.

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