In one recent case, a seller engaged a buyer in a discussion about an opportunity, and the buyer was interested. They had a few meetings, but then the sale fizzled out.
When the seller asked why, the buyer told him that they simply weren't going to pursue it further.
The seller said later, "The business impact story here was tremendous; more than a 8 times return on investment was easy to see. That this sale didn't move forward...I can't believe they just didn't see it."
When the buyer was asked, he said, "Oh, I saw the ROI case. I got it. I would have loved to achieve it. I just didn't believe it would come true."
The buyer saw the ROI; he just didn't believe it. There was too much risk.
Twenty years ago, marketers and sellers didn't focus as much on results and impact. The transition away from the features and benefits approach had just begun. Fast forward to today, and every company's marketing and sales messages promise results—often wild results. Yet while everyone is promising results, buyers regularly report disappointment.
In a study by Bain & Company, 375 companies were asked if they believed they delivered a "superior value proposition" to clients. 80% said yes.
Bain then asked the clients of those same companies if they agreed. Only 8% did.
Buyers don't believe they get what they expect or were promised. They've been burned in the past and are skeptical of sellers and their exaggerated claims. It's just too risky.
In a vacuum, risk and reward move together—the higher the reward, the greater the perception of risk. As a seller, you have the power to either minimize or enhance this perception. And if you want to win the sale, I suggest you work on minimizing it.
The 4 Areas of Risk
In a study of over 700 purchases, one of the key findings was that minimizing risk has increased in importance according to buyers, and that the sellers who win are much more attuned to risk than second-place finishers. Not surprising given the fact that buyers have been burned in the past.
Yet for every 10 pieces of advice you find about demonstrating the impact case and the ROI to buyers, you may find 1 piece of advice about minimizing the perception of risk in sales.
It's a rarely talked about, yet key factor in winning sales.
In our research, the following factors showed up as important in minimizing risk:
- Persuaded me we would achieve results
- Provider is respected at my organization
- Provider has experience in the specific area I have needs and in my industry
- Seller was professional
- Seller depicted purchase process accurately
- Seller was trustworthy
- Seller inspired confidence in his/her company
- Seller helped me avoid potential pitfalls
When you group them together, you can see that buyers tend to perceive risk in four areas:
Buyers have to believe, and believe in, the seller themselves. They need to trust the seller and the seller's advice. Risk is lessened when sellers demonstrate:
- Competence: The seller knows what he or she is doing
- Integrity: The seller has the buyer's best interest in mind
- Reliability: The seller delivers on their promises
- Intimacy: The seller knows the buyer really well
When your buyer perceives the risk in you, the seller, to be too high, they won't take your advice, they won't trust your motives, they won't seek to build a relationship with you, and ultimately they won't buy from you.
Buyers have to believe the product or service will perform as advertised. Buyers need to be confident that it will be implemented, completed, and operate properly. If they believe that it won't work as it's supposed to, won't get adopted, or won't last very long, then the risk is too high for the buyer to move forward.
Buyers need to believe the seller's company is the right partner. When evaluating a purchase, buyers ask themselves, "Should I align with this company? Are they a good partner for us?" When buyers believe you are a good partner, they tend to:
- Trust the company
- Believe it's a good company with which to associate
- Believe that if there are problems, the company will resolve them
- Believe that the company will be around for the long term and will grow with them
Buyers may trust your advice and like your offerings, but if they perceive your company as a risky choice, they will look to align with one of your competitors.
Buyers need to believe they will achieve the promised results in an acceptable time frame. They need to be confident that they are making a good investment. They need to believe the result will be achieved, and that the best way to achieve it is with your help.
Buyers may trust you, your offering, and your company, but if they don't believe in the outcome, they will take no action because they perceive that "It's not worth it."
It's up to the seller to discover which categories are most important to each individual buyer and to minimise risk in each category.
At the end of the day, if you can get your buyers to believe—in you, in your offering, in your company, and in the outcome you say you can achieve, then you've got a good chance of winning the sale.