Most purchases are not made with the intention of selecting the absolute best choice. Instead, the safest, good-enough choice is what matters more. The safer choice is easier, more familiar, and carries less risk. The better choice is usually more innovative, but anything new is often associated with uncertainty or unfamiliarity (recall: Decision Threshold).
Consider reducing the anxiety of a purchase by addressing the potential risks associated with it. Common concerns could be:
“Can I afford this?”
“Will it work for me/work as advertised?”
“How quickly will I see results?”
“What if I don’t like it?”
“What if it breaks/doesn’t work?”
“What if this startup goes out of business?”
“Sounds too good to be true. What’s the catch?”
Narrowing the scope of the project is one such way to reduce risk for both your prospect and yourself. Refer back to Thin-Edge-Of-The-Wedge for more ideas.
Simpler projects are also easier for your prospects to approve because they are less likely to require escalation to upper management. Once they’ve begun working with you, they’re much more likely to continue if they are satisfied with your solution or service.
Risk Reversal
Bolder yet, if you’re confident about your offering, it’s worth exploring risk reversal. Free returns with postage paid is one such example. You’re right to be concerned about people abusing it; there will be a select few who will. Even so, many companies still embrace risk reversal because it helps them capture many more customers than they would not have otherwise been able to. The benefit outweighs the cost.
Here’s what addressing and reversing risk could look like for a buyer/seller marketplace:
- We are the largest marketplace for X.
- List your offering, and we’ll guarantee it will sell, or we will buy it from you if it expires (perhaps at a reduced rate).
- It’s free to create a listing; you only pay us a % of the transaction when it’s sold.
A way to frame risk reversal is with IF, THEN statements: IF we don’t deliver on our promises, THEN we’ll compensate you by assuming X risk.
The crucial aspect of risk reversal is your THEN proposition must outweigh the original risk that deterred action. If your compensation is of equal or lesser value, prospects would prefer to avoid taking any action altogether. Prospects want to perceive a win-win outcome in either scenario before they are willing to take the leap.
Not everyone will value a money-back guarantee. Compensation is subjective and varies from person to person. To address this, connect the compensation to your original promise or tie it back to your company values to emphasize your genuine commitment to serving customers with integrity.
Let’s examine a real example of such a risk reversal initiative and its impact on the business:
Temu is an online general goods marketplace, similar to Amazon, but with numerous knockoff and low-quality products manufactured and imported from China. They’re not my preferred company to use as a case study because there’s no indication that they’re purpose-driven (the design of their app suggests their sole purpose is profit, at all costs). Nevertheless, there are some interesting insights from how they’ve implemented their price adjustment guarantee.
Customers are guaranteed to receive a credit or refund if the price of the product they purchased has dropped within 30 days of placing an order. This guarantee will also be honored if they find another vendor offering an identical product at a lower price.
They even take it a step further and make the process as painless as possible. When you log in to view your orders, if there has been a price change in any of the items within your order, the option is automatically displayed. You don’t need to check each item and reference the current price versus the price when you ordered. The difference is automatically displayed (if the same item from the same vendor has changed in pricing) and totaled across however many items you purchased in that order.
What does this do for them?
- You’ll worry and hesitate less when shopping. With less concern that you might be missing out on a more opportune time to buy.
- If you decide to receive a credit, it is applied to your account instantaneously. Applying a credit instead of a cashback also guarantees you’ll come back to spend that money on their platform, even if you end up buying the item you originally intended to purchase somewhere else.
- As easy as they make it, the price adjustment request isn’t automated and still requires the user to initiate. This encourages people to use their app more often to check if prices have dropped. It creates a habit, and while they’re in the app, they’re also more likely to browse for other items.
- And of course, it decreases returns initiated due to price differences. This saves them a lot of logistical costs (shipping, restocking, payment processing), and as a side effect, is also better for the environment.
This specific initiative, though obviously strategic and intentional, doesn’t come across as manipulative, as it ultimately serves their customers’ best interest. It turns a potentially negative experience (discovering you’ve spent more money than necessary and needing to navigate a refund process) into a positive one that exceeds the customer’s expectations and further builds loyalty.