How Risk Reversals Can Increase Your Profits By 20-30%

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Regardless of how good of a salesperson you are, chances are, you’re still leaving money on the table.

And I’m not talking about having to learn new skills for closing deals…

Let me ask you this:

Right now, out of all the prospects your company speaks too, how many are you closing?

20%? 50%? 80%?

Whatever the amount, I’ll show you a strategy you can use to close an extra 20-30%.

And it’s all about taking the risk off our customers and putting it on to you.

When we look at the biggest, number one reason why customers don’t do business with you; it’s because there was too much risk involved.
What do I mean by risk?

Whenever two people come together in a buying situation, one of the people will be taking on more risk than the other.

For one of the parties involved, they’ll be taking on more risk.

And generally, it’s the end user, the buyer, the customer who’s taking the risk.

If I’m going to buy a pair of shoes, perhaps after 2 hours they’ll start to fall apart or rub in the wrong places and cause blisters. I’ve then wasted the $150 I spent on the shoes, the time and effort taken to go and buy them, and I’ll have to go and buy another pair.

The store on the other hand has risked nothing.

They’ve taken money for the shoes and that’s the end of the story.

If I’m going to a financial planner, the risk could be investing money and losing it all.

If I’m going to get my carpets cleaned, I risk having to wait for 2-3 hours whilst the cleaners are late.

I risk having a bad carpet job done, and having to go spend money to get it done again.

When people are looking at buying something, they’re unconsciously evaluating how much risk is involved.
It’s also the cause of the dreaded “price war” and “race to the bottom”.
Think about it… If all the companies have the same “risk” involved, people start deciding on price.
And if the marketplace is choosing a business on price, then price wars start.

All of a sudden everyone’s charging the lowest possible prices and the profit margins are almost gone.

So having an incredible risk reversal will not only help you close more prospects, but will also allow you to charge more.
Let’s take a look at an example.

I was dealing with a software company who sold a client management and relationship building software to real estate agents.

The software would help the real estate agent keep their client base happy. It would help them keep contact and would result in more sales.

It would also save them as much as 5 hours a week.

As opposed to manually remembering each and every client, when they should be contacting them, putting together newsletters etc, this software took it all off their hands and did it for them.

This company was priced quite high in the marketplace. From memory they were about 30-40% more expensive than their competitors, and at the same time they delivered more features and results.

However the company had absolutely NO risk reversal.

They were asking their customers to spend a lot of money with them.

The risks were tremendous.

The software could be too complicated to use. It might not function properly.

As a result, the real estate agent would waste hours, upon hours of time and effort setting it up and learning to use it, only to waste thousands of dollars.

The company was taking virtually no risk. If the software didn’t function properly, they did have a support department, but they really had nothing to lose.

Now in saying this, the software WAS incredibly powerful and everyone who used it loved it.

So we put in place a killer referral system.

We said: “Take the software, and use it for two months. We’ll provide you basic training on how to use it absolutely free. And we’ll only charge you after you’ve been using it for two months, experienced how easy and simple it is to use, and also experienced the huge results it can get you. If in those two months you decide you don’t like it, then we’ll simply take it off your hands and you won’t be charged a cent!”

Now imagine you’re about to buy a piece of software. You have two options:

  • The first is cheaper with less features
  • The second is more expensive, more powerful, but will also let you use it for 2 months completely FREE, before you’re charged anything.

Which one are you going to use?

This strategy has been used a lot recently with all types cheaper priced online software for every use and purpose.

But at the time this was the only company who sold a program more than $5,000 a year that had an offer like this.

As a result they were able to grow the business by 45% in the space of a few months.

When people started using the software, invested all the time using the software and experienced the results, it was much easier for them just to pay the monthly fee than to stop using it and learn another software.

It truly changed this business’s growth trajectory.

I saw the owner again actually in late 2013, and he’d just brought his 2nd Porsche. It’s safe to say he’s pretty happy too!

In order to implement this strategy successfully, you need to consider two things:

  1. When your customers are buying from you, what are the major risks that they’re taking?
  2. What could YOU do to take that risk off of them, and put it onto you?

If you’d like help with putting this into practice in your business so you can add at least 20-30% to your bottom line each and every month, give us a call at 1300 680 223. We can help.