Every time two people do business, one of them is taking a risk. What does it mean? Think about it this way.
If every day you buy lunch at the same restaurant, and a new restaurant opens up across the street, you now have a problem. You might be considering trying the new restaurant across the street, but this is the problem. You already know every time you go to this familiar restaurant, what you’re paying, and what you’re getting. You feel it’s a worthy exchange. You gave something, you received something, you made a deal, and you’re happy about what you paid or you wouldn’t have returned again and again.
Now this new restaurant that just opened across the street “calls to you.” You go in there, pay money, buy lunch–but it doesn’t taste very good. You just wasted your lunch hour. The change was not worth the risk so you returned to the place you’ve always gone to, pick up your usual lunch, and go back to work.
But, if the new restaurant is a pizza place that says, “Come try our food. If you don’t like it after the first bite, we’ll give you your money back.” What happens? A lot of people that wouldn’t have tried it say, “The pizza is about the same price. I think I’ll try it. What’s the worst that can happen? I’ll just get my money back, and won’t be any worse for the wear, and I’ll try something new that maybe will be good or better than what I usually eat.”
This is called risk reversal–whenever you do business with somebody, if you can take any risk off them and put it on yourself, many more people will take you up on the offer.
How can you reduce the “risk” that your customer takes when doing business with you- and make them more comfortable doing it?
Good Question Rabbi.
That is the problem in any service business, expecially where you supply only a service, such as accounting, medical services, legal advice or marketing consulting.
How does the client measure success? How does he know he got a good deal? Lots of lawyers are terrible – their advice sucks. Some accountants will get you in trouble with the tax authorities. Plenty of marketers don’t even practice what they preach. And often doctors may kill you, or you may get sicker.
What I consider to be so-so service, the next person may consider it to be outstanding.
Perplexing and I have yet to discover an answer …
Stay Awesome
Rick
Guarantees are a great addition to effective marketing. As the Rabbi says, it removes the most common objection of a prospective new customer – “What if I don’t like it.”
Interestingly, some business owners throw up their own objection to guarantees! “What if someone takes advantage?” You have to realize that some percentage of the people – no matter what kind of byzantine rules you put on the guarantee – *will* take advantage. Better to write off a percentage as “guarantee shrinkage” and then make the guarantee as easy as possible for the vast majority that will give your offer a fair shake.
Regarding Rick’s quandary: I know this may not apply to every service business, but in my service business I plan to give the entry-level client the first two months free. If they are with me for the third month, we’re golden.
With the professionals you mentioned, they are covered by insurance.
It doesn’t matter what any else thinks, the only one whose opinion is the potential customer. The numbers work in the favor of risk reversal.
Great idea