Closing New Business Is All About Risk Reduction

The first time I went to the mall with my money was a big deal. In my house, the way things worked was that if we wanted something that my parents weren't going to get us, we had to save our money.

The other challenge in our house was that my mom was in no particular rush to take us back shopping. So the very thing we wanted might be gone when we finally got there, as was the case with the skateboard I wanted.

But this time there would be no chance that I would miss out. I knew this because I'd been heading to the mall every other week to make sure the pair of shoes I wanted were still at the Foot Locker shoe store.

There I stood, in the store, at the counter with the pair of high tops I had been saving for. Suddenly it hit me that all my money would be gone the moment I paid for the shoes.

What if they weren't the right ones? What if they were too stiff, even after wearing them for a while? What if it turned out I needed a new size?

I wasn't sure I was ready to part with my money.

Have You Been There? Your Clients Have.

I don't know about you but these days everyone offers a guarantee of some sort. Whether you're in a retail store like I was back when I was kid or whether you're making an online purchase.

But partially because they're everywhere, these guarantees don't feel all that special. And because they don't, they don't work as well.

In my day job, I'm far-removed from freelance work. I manage the development and delivery of large WordPress projects that can cost half a million dollars.

Here's the reality of the situation – my clients in my day job are just like my clients when I do any freelance work. They want guarantees. The prospect of spending money creates some stress.

Because everyone, regardless of how much the bill will be, feels like it's more than they're ready to spend.

And if they're not sure about spending that much, it can delay your ability to close any kind of deal – whether it's five thousand or five hundred thousand dollars.

The Name of the Game Is Risk Reduction.

The trick to reducing risk is first to get into the shoes of your client. Most of us don't do this. We get into our shoes and determine what we're willing to put on the line.

A client doesn't care about any of that. They have their fears. Those are the things that you have to consider. Regardless of how likely they may be.

I once had a client worry that a WordPress update would break his theme. Trust me when I tell you there was no way that was possible. But that didn't stop him from feeling that fear.

The result? I wrote him a guarantee that said I would repair any part of the code that broke if it were because a WordPress update did the damage. It was good for six months.

At Crowd Favorite, we warranty the code we write for 12 months. Any bug found, not just in the next 30 days, but for 12 months, is one we'll fix for free. It reduces a lot of perceived risk that our clients feel.

I once had a client that worried I would disappear after her site went live. So I promised to give her a dedicated phone number that she could call if she had a legit emergency. I promised I would get her message and call her within 3 hours, as long as it was a legit emergency.

Thank God for Google Voice – because I didn't really want to give away my cell number. But that Google Voice number was never called for nine months after her site went live. In fact, Google tried to reclaim the number since I wasn't using it.

People have fears. Your job, when trying to close a deal, is to mitigate them. And offering a guarantee (that means something) is one of the best ways to do it – because if you reduce legitimate risk, you're taking away the fears that cause someone to pause before signing a deal.

 The Guarantee Has to Be For Real

Wondering what kinds of guarantees will work to reduce real and serious risks? Here is a couple I think will work for you.

Make your last payment due 30 days after go-live. If you do this, you're telling the customer that you'll be around as it goes live and you'll be there to fix issues. You remove the fear that you'll toss your code on a server and run!

Offer a maintenance contract to extend past your project.

It doesn't have to be a huge thing, but you could charge a percentage of your project (25%, for example) to be available for tweaks and updates for the period of a year. You remove the fear that no one will be around to keep it updated once you're gone!

Offer to share in future revenue.

Now I don't recommend this to everyone, but I once did it, and it worked very well for me (after a lot of research). Basically, I was paid per additional lead that came thru the website I created, after a baseline of leads came in.

Since the old site had been getting very few leads, just about every lead that came in was money for me. I made 5 times the cost of a normal website that year from that client, by reducing their up front risk of spending money that wouldn't be effective.

Offer money back guarantee that is 110%.

It's not often that someone says they'll give you all your money back, plus some. But if you're doing the kind of work where you already have a money-back guarantee, consider making it more than 100%. You make it silly not to hire you!

To Close New Business, You Have To Reduce Risk.

The point is, your job, as you look to close new business, is to eliminate any reason for fear, uncertainty or doubt.

The more you reduce risk, the better your chances are of closing new business. So here's my final tip, in case you didn't catch the theme from my examples above.

As I stood at the counter with my shoes and cash in hand, the guy working there said, “We normally only give you credit if you come back with shoes you don't want. But I know you're going to love those high tops, so here's what I'll do. If you don't like them, come back, bring them back, and I'll give you all your cash back. Promise.”

I couldn't believe it. But I also couldn't turn that kind of guarantee down. So I walked out with the shoes on. And never looked back.

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Chris Lema

Chris Lema

Chris Lema is the CTO and Chief Strategist at Crowd Favorite. He’s also a daily blogger, a public speaker, and product strategist.

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