From time to time I meet people whose work impresses me as being valuable, practical and worth sharing with my readers. Today’s guest essay is one of those. I recently met Graham McGregor at a conference in San Diego. What he says is worth reading.
“Progress always involves risk; you can’t steal second base and keep your foot on first base“.
– Fredrick Wilcox –
Reduce Risk and Increase Sales
By Graham McGregor
I had a costly experience in risk perception a few years ago when I was selling sales training programs.
I was introduced to the national sales manager of a large company in the computer field.
They were looking for a program to use to train their entire sales team, and ours had been recommended.
The program I was selling had been used very successfully with other large companies overseas – and the sales manager seemed to really like it. But they were also considering another training program. One of the directors of the company had attended it … and was happy with his experience. But it was a lot more expensive than mine – $200,000 more.
To my surprise, they decided to go with the more expensive program.
The problem with what I was selling was that even though it looked good (and was certainly far cheaper), it was perceived as being risky by the buying committee. It was risky, because no one in the company had actually attended it. In the minds of these business people, it was safer to pay far more and go with a proven product than try something new.
And that brings me to the purpose of this article.
For potential customers, there is a certain amount of risk associated with buying your product or service. And until you reduce this perceived risk, they will often “vote with their wallets” and spend their money with your competitors.
The number one rule with reducing perceived risk is this: “Everything counts.”
In other words, everything you do or say when interacting with a prospective customer has an impact – positive or negative – on how risky they think it is to buy your product or service. Everything you say or do makes your customer think it’s either more risky or less risky to do business with you.
Let’s say you phone two trades people and leave a message asking them to contact you about their services. One trades person phones you back within one hour and the other one phones you back two days later. The trades person who phoned you back in two days could be twice as good as the one who phoned you back in one hour. But because he took two days to make contact, you assume he is slow, sloppy, and not very good at what he does. You think it is more risky to do business with him … simply because he didn’t return your phone call promptly. I had a similar experience a few weeks ago.
I wanted to buy a particular business program and found a company on the Internet that sold it. I sent this company a short e-mail asking a very simple question about this program – and I never received a reply. So I automatically assumed that this company was too risky to do business with and decided to never spend my money with them.
I then e-mailed another business that had a version of this same program that was considerably more expensive – and received a reply within one hour. I happily gave them my money.
Here are some simple ways to reduce risk in the minds of your potential customers:
- Reduce risk with testimonial letters.
The big question going through every customer’s mind is: “Who else has purchased this product or service – and how did it work out for them?”
Testimonial letters from happy customers are a wonderful way to answer this question.
Many years ago, when I was selling advertising, I called on a real estate office in a small town. On the wall of the office were several hundred cards and letters from delighted customers. I read a few of them and thought to myself, “Boy, this company must be good. Look at all their happy clients!”
- Reduce risk by having an excellent sales presentation.
Most of your customers will judge the quality of your product or service by the quality of your sales presentation. Just as they will judge the quality of medical professionals by how thorough their examinations are.
I discovered this concept by accident when I was selling sales training services
A sales manager who bought my services referred me to her husband, who was a sales manager for another company. When I sat down with him, he told me that he knew very little about what I was selling. However, his wife had told him that I was one of the best salespeople she had ever met – and told him that he had to buy from me. That was very flattering. But all I had done to make her (and other potential clients) think my services were good was get very good at my sales presentations.
- Reduce risk by how you look and act.
Understand that customers often make decisions about the quality of most products and services based on tiny things. One of the things many customers will pick up on is how you look.
By “how you look,” I mean everything that is associated with you. Your car, your place of business, your sales presentation materials, your clothes, your shoes, and so on. If any of these things are not in keeping with someone who is good at what he does in your type of business, little warning bells will go off in your customer’s mind.
Is your presentation material neat and tidy … or is it sloppy and messy?
Are your shoes clean and polished … or are they dirty and scuffed?
Are there spelling mistakes in your written material?
These might seem like unimportant details – but remember that every one of them counts when you are interacting with potential customers. As far as they are concerned, it either reduces risk or increases risk.
If you have dirty and scuffed shoes, some customers will automatically think your product or service is not very good. First appearances have a powerful impact on the way people think about you.
What you want to do is examine every aspect of your appearance and how you act, and ask yourself, “In my customer’s mind, does this reduce or increase the potential risk of doing business with me?” And if the answer on anything is “It increases risk,” you need to do something about it. (Sometimes, it helps to ask people you trust if they can pick up on details about you that may be causing your customers some concern.)
When I first began selling sales training services, I had a pair of black sneakers that I wore to every sales presentation. They were very comfortable … and I didn’t think they had any effect on my sales. However, a colleague who attended a presentation that I made to a group of 12 salespeople told me that four of the people spent most of the time looking at my black sneakers, rather than listening to what I was saying. Needless to say, that was the last time I wore those sneakers to a presentation!
Today’s Action Plan
Remember that every customer who is thinking of buying your product or service has a little calculator in his head that mentally weighs up the risk of buying from you. And anything you can do to reduce that risk will increase your chances of making a sale.