The Risk Factor

by Graham Denton

In assessing needs, we usually concentrate on the positive. We try to determine what our customers want to accomplish and how the delivery of our solutions can help them do that. That's common sense. But some of those accomplishments are going to be "defensive" ones, that is, things that our customers must do to protect themselves, to put out fires, to avoid problems. Many times what we are selling is risk reduction. We don't have to be involved in the insurance business for this to be true. Delivering a sense of greater security is a part of most sales.

Brian Tracy, author of Advanced Selling Strategies, goes so far as to say that the alleviation of risk is "the critical factor in selling today." He divides this critical factor into four elements, four sub-factors that can contribute to a customer's risk perception. They are size, number of people, product life, and unfamiliarity.

Size. Not physical size, but the size of the investment. The bigger the investment, the greater the perceived risk, and therefore the more diligently you have to attend to the customer's potential anxiety. If you're buying a package of Lifesavers, Tracy says, you're not going to be too concerned about something going wrong. If you're buying the Lifesavers company, it's a different story.

Number of people. The more people who will be affected by a purchase decision, the greater the perception of risk by those making the decision. The Lifesavers example works here too. Think of the difference between one person liking or not liking a candy and hundreds or thousands of employees being affected by an acquisition.

Product life. This factor presents an interesting twist on the seemingly self-evident proposition that you want your product purchases to last forever. That proposition is only true if the products are perfect. If you purchase and install something that later doesn't work out, you could be stuck with a losing decision for the life of the product.uct. This is one reason, of course, that customers want lengthy warrantees and upgrade provisions. They help to reduce the perceived risk of a long-term investment.

Unfamiliarity. You may have the most reliable product line on the planet, but if your customer doesn't believe that, it doesn't matter. If the customer is unfamiliar with you, your company, or your solutions, expect the level of perceived risk to skyrocket. You can alleviate that perception with great results, but this takes time. You cannot eliminate the risk perception before the first sale. Not even if you're the top producer for a global brand leader.

You doubt this last point? Consider how cautious line salespeople were, until a few years ago, in moving to Internet-based solutions for their contact management. Or how slowly their professional counterparts, a hundred years earlier, were to appreciate the significance of Mr. Bell's telephone. There was nothing wrong with the product in either instance. What impeded acceptance was unfamiliarity--and the perception of risk.

Successful salespeople, therefore, aren't always the ones with the lowest priced product or service. In fact, that's seldom the case any more. What industry leaders provide are low-risk solutions. Customers will meet a premium price for the peace of mind that brings. Tracy sums it up well: "Whenever possible, the customer will move up to higher price and lower risk to relieve buying tensions, rather than moving down to lower price and higher risk to save money."

In assessing your customers' needs, keep that in mind. Often, what they want is security, and they're willing to pay for it.