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Sydney-based business consultant John Haining is a guest writer at IPitch. You can read more from this seasoned pro on his website.

Three, two, one, bungee!

As you jump off the ledge your mind is screaming at you about risk. About what can go wrong, about the negative consequences, and about how crazy you are. No matter how much you’ve thought about it you know at the back of your mind that things can go wrong.

Yet something has convinced you that jumping off a ledge with only a bungee to stop you is safe enough.

Welcome to the mind of your first customer.

Like it or not, your first customer feels like they are about to go and do a bungee jump. No matter how much you know that risks are not there, the customer always has that voice screaming at them about what can go wrong. About the risks involved in what they are about to do.

So, in addition to demonstrating that your product works and will address their needs, you need to overcome the risks involved in that first sale, and convince them that buying your product or service is safe enough for them. In order to do this you need to address the risks your customer anticipates.

What are the risks your customer anticipates?

Confronting the risks that your customers have means you need to understand what they are going through. You need to stand on the ledge with them and wrap your head around all of the thoughts they are having, whether based on past experiences or on what you’re offering. There are obvious risks and hidden risks to every transaction, and you need a response to each of them.

What are the obvious risks?

Most obvious risks can be anticipated up front (yes, that’s why they’re obvious!). You see them every time you shop or make a purchase, they are issues like:

• Will it work?
• Will I lose money?
• Will I get the promised results?
• Will the product or service be easy to use?
• Will the company give me good support?
• What if something goes wrong?
• What if it breaks or stops working?

Obvious risks vary from product to product, but always need to be overcome through your approach to engaging the customer, whether that’s through the web, in print or with a face to face salesperson. In fact, failing to overcome these obvious risks usually means a customer will turn and walk away, rather than complete the transaction.

What are hidden risks?

Hidden risks, on the other hand, can be scary stuff. They force you deep into your customer’s mind, sifting around and trying to get to the nugget of risk that you need to address. They can be things like:

• Will I be embarrassed (or fired) if your product or service doesn’t work?
• What happens if your company doesn’t make it, if you’re not around tomorrow?
• What if I open or damage the product, will you still take it back?
• How do I know that I’ve paid the right price and you won’t suddenly make it cheaper tomorrow?

So, how do I overcome all of these risks for my first customer?

That’s lots of risk, right? The methods for overcoming these risks for your first customer are actually fairly straightforward, and will probably help you win many, many customers over time.

1. Build trust through experience.
This is the real role of a “beta”, prototype or sampling approach (like the old salesman’s “puppy dog close”). You want your customer to be involved with your product in a real and meaningful way as early as possible, building commitment and getting you feedback. The risk of moving to the actual product will be much lower, particularly if that process is explained to the customer as part of the beta or sampling process. In fact, remaining silent on the pathway to a final product or purchase can actually present as a hidden risk for entering a beta – customers who may never expect to pay!

2. Build trust through social proof.
If you’ve already got through beta or prototyping and you can’t allow sampling you’re going to have to use another means of defeating the risk. The most common is social proof, whether through testimonials from experts in the field, third party prepared case studies, an accreditation or endorsement by a known brand or certification (eg ISO), the use of product/service reviews (such as from your beta testers or fans), and even access to the people who are providing these endorsements. It’s even better if these people address the obvious or hidden risks directly for you – and many will if you ask them about their experience.

3. Reverse the risk creatively.
Understanding the risk is one thing – reversing it is quite another. This where things like guarantees (going above and beyond the consumer protection laws) comes in to play. And not just the “money back” guarantee, as refunding the customer’s money may not address the full dimensions of the risk. Examples include things like “double your money back”, “double the difference” (for lower priced goods/services), the “lawn mower” guarantee for products that may have been used all the way through to the “replacement if lost or damaged” or “we’ll pay the insurance against your downside” or “we’ll cover the costs of shipping goods back to us” guarantees.

4. Incentivise purchase, participation and involvement.
One of the most powerful techniques to get that first customer on board is to make them an offer that’s hard to refuse. Instead of discounting, you might offer them protection against price rises for a certain period. You might offer them the opportunity to participate in a reseller or referral program or to be part of a user or owner group for free where other customers will have to pay. For some customers, being asked to present at a conference or do an interview for the press or video for your website might fire them up as they get to raise their own profile along with your product/service. Another option is to have them be the subject of a case study from a third party. No matter how you approach this one, you really want to get the customer fired up and feeling special. After all, you only have one first, second, third or even one thousandth or one millionth customer.

If you look closely at most pre-launch or just launched products and services, you’ll see that they actually use or combine all of these techniques in order to tempt the customer into crossing the line from interested to committed to the purchase.

But, that sounds like a lot of work.

In addition to getting your product or service together, dealing with all the other business issues that present, putting together even one of these methods of handling risk can seem like a lot of work. The reality, of course, is that not putting this thought and work in means you just won’t make those early sales. In fact, if the hidden risks are really high (and unaddressed) you might find getting any sales a challenge, and you may not even know why.

Won’t those guarantees just cost me money?

Yes, guarantees cost money. And handing money back to a customer can really hurt. But it will hurt you a lot more in the long run if you don’t have a guarantee and return that money as soon and as cheerfully as possible. The whole concept of a guarantee is to get you more sales than the guarantee costs you, and a guarantee is only worthwhile if it addresses an obvious or hidden risk that the customer anticipates.

I’ll just wait until somebody complains…

It’s tempting to put your disclaimers, guarantees and risk reversals in fine print. And it’s easy to wait and see what complaints you get from customers before you tell them about the policies you have available to help them. But, it’s the wrong approach.

Get your risk reversals out there in front of the customer. Show them the photos, testimonials and case studies from beta users or people who have used the prototype or sampled your product. Write up the reactions in big bold print, just don’t hide them away. Sometimes just knowing that an experience is “risk free” is all that it takes to get a customer to make that purchase.

Summary

Getting your first sale is not easy. Having a great product or service is only one part of the equation. You really need to get your customer over the line by:

• Understanding their obvious and hidden risks
• Preparing a risk-based mix of experiences, social proof, risk reversal and incentives
• Telling everyone who will listen about how you address those risks

After they bungee jump most people are screaming, excited and jumping around. They are encouraging all their friends to go through the risk and to have the experience that they’ve just had.

And that’s what you want your customer to do, too, so that future customers are lining up at the ledge and getting excited about the leap they’re about to take.

Bungee, bungee, bungee = sale, sale, sale.

Next Steps

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With a background in helping businesses get ready for succession, improve their financial position, raise funds, commercialise new technologies, implement management and marketing initiatives and prepare operations for growth, it’s safe to say Sydney-based business consultant John Haining knows a bit about the startup space. You can read more of John’s advice or tap into his services by checking out his website or subscribing to his newsletter.