Getting new customers can be an expensive exercise. They do not know you, do not trust you and have not done business with you. For these reasons, taking them from competitors can mean a lot of time and money.
This is why customer endorsement, referrals and other such tools are frequently and effectively used to gain new customers through the recommendations of old customers.
However, cold contact is still something that a lot of businesses will engage in. Because of the nature of cold calling, it is imperative that you make it faster and cheaper to win new customers by removing the risk they perceive will be inevitable if they try your product or service.
The first step to removing risk is to look at the value of that new customer, and in particular their ‘lifetime value’ after that first initial sale. For instance, if a customer is typically worth 10 repeat sales, then removing the risk through a money-back guarantee might be a good strategy, because the profit loss that you risk at the front end of the sale is made up through the repeat sales you win over time.
The more sales you believe you will win over time, the more you can invest in removing the risk at the front end of the sale. Think of it as a calculation just like insurance – what is the chance of losing and what is the value of that loss compared to the end result?
The next step is to identify the risks that your customers perceive. You can do this by interviewing your customers, especially the customers who enquired but did not buy. Log their concerns and their fears; that list of fears then becomes your list of risks to reverse.
An impressive example of this is Paddi Lund, a dentist, speaker and author. He identified the common fears that people have when they visit a dental practice and simply removed them. He removed the clinical smell of his practice by baking buns on-site and removed the common fear of pain by installing a button that clients could press if they felt discomfort, guaranteeing no pain.
Risk reversals that you might consider implementing in your own business could include conditional guarantees promising only a specific element of what you provide, unconditional guarantees promising general satisfaction, staged projects that have checkpoints allowing your clients to approve what is happening before they continue, commencements of a service that require their approval before becoming ‘locked-in’, and free trials.
Risk reversal is an extremely powerful tool because it has the ability to completely remove the risk that new customers consider greatly before they try your product or service, paving the way for faster and cheaper growth.