How to Eliminate Risk for Your Customers
Selling products means understanding human psychology. Humans are imperfect creatures and when they decide to buy something, there can be all kinds of known and unknown activities going on behind the scenes. People often feel very elevated when they make purchases. It can be a release of endorphins to buy things. There is a reason why they call it “retail therapy”. People can also have unexpected emotions and thoughts that they aren't even aware of that can drive their behavior. Understanding these and tapping into them is the best way to make sure that you communicate effectively to your prospective customers, encourage people to buy from you and maximize your sales.
It is important to note that being aware of how people work psychologically and using that knowledge, should be applied in an ethical way. It is ethical to use these tactics if done honestly. It is unethical if you choose to use these tactics and lie or mislead people. Choose wisely.
What is Risk Aversion?
One aspect of human psychology that is crucial to your ability to sell is risk aversion. Risk aversion refers to the simple fact that people don't like risk. That might sound obvious, but it's important to recognize just how much people are averse to risk. In fact, people are so averse to risk to the point that they'll make very bad decisions just to avoid risk.
For example, if you were given the option to enter into a competition where there was a 30% chance you would lose $30 and a 70% chance you would gain $100, there's a good chance you would not want to enter. This is despite the fact that it would actually be the smart decision, based purely on the statistics. People hate risk and they would rather maintain the status quo than risk increasing their standing.
People also have a poor ability to accurately assess risk. They do not do so logically. They do so emotionally. So if a person has gotten burned before buying a similar product to yours, they will be more likely to be risk averse to buying your product, even if your product is better and really does address their needs.
While any transaction will automatically involve some element of risk., as a seller, it's your job to ethically help your prospective buyers and customer get over their fears and to help them solve their problems by using your products and services.
How to Remove Risk?
So, with that in mind, how do you go about removing risk as a seller? The first step of course is to understand just what exactly it is that your buyers are afraid of! There are several things that can potentially go wrong with any transaction and these are the things that your buyers will be most worried about.
- There's the risk that the product won't live up to your sales pitch and they won't be getting a good deal.
- There is the risk that your product will never show up or show up damaged and they'll have wasted their money or time.
- There's the risk that their money will get stolen because the transaction isn't secure or that you aren't a legitimate business.
So, how can you remove this risk? Here are a few ways…
Offer a Free Trial
One easy option is to offer a free trial. This is a great way to remove risk because the user has the item in their hands and gets to try it before they decide if it's worth the money. There's an old saying that the very best way to sell a puppy is to let the buyer “hold the puppy”. After that, they'll likely be happy to put down any amount of cash!
Offer a Money Back Guarantee
A similar strategy to a free trial is to offer a money back guarantee. That means that you offer to give the money back to the buy with no questions asked. Most people won't take you up on the offer, but knowing it is there can make a big difference!
This has a way of easing a lot of concerns. People want to know that they have made a good choice when they buy some thing and they are often indecisive and noncommittal because they don't want to make a mistake and/or look bad for it. And your buyer wants to be reassured that they can correct their mistake and be made whole again. People also often have a poor understanding of what their problems really are and how to solve them. People are all different and part of your job is to help educate them on their problem and how your product or service can help them with their needs. Along the way, people will buy your product and may discover that their problem is a bit different than they originally thought and really need a different kind of solution that your product can't solve. Help them by offering a risk-free guarantee.
There are a lot of different ways you can do this… you can even offer to let people keep a part of the offer, even if they return the full product, or given them double their money back. Yes, double! Most people again, will not take you up on this offer. You may experience some people who do, who really didn't enjoy your product or service. And far fewer people will take advantage of you. Most people are good people who just want help solving their problems. Focus on creating good products and services that help people solve their problems and worry less about whether people are taking advantage of you. You will end up making more sales in the long term and getting far less returns.
The Site Design and Checkout
Finally, make sure that your site design is as professional as possible and that you have a checkout that is secure using the latest encryption technology.
- Display images of security features
- Use recognized credit card processors
- Show your business information and how buyers can contact you if they have questions or concerns
- Provide social proof of satisfied customers.
All of these things will help your reverse the risk your prospective and actual customers feel and instead make them confident to do business with you.