Are you trying to find ways to grow your business? Stephen Fear, Entrepreneur in Residence at The British Library, believes that one of the strategies that will help you develop more business is what he calls risk reversal.
Removing the Risk from your Customers
He points to the typical buying transaction in which the customers take the risk that what they buy will live up to its claims. For example, if you buy a new type of stain remover, you expect it to deal with all the stains mentioned on the container. If it doesn’t do that, you’ve wasted your money, and that’s the risk you took when you bought it. But if the manufacturer adds a money back guarantee on the container, you can return it and get your money back. The risk of losing out is removed.
As a seller of a product or service, you can reverse the risk to your customers and take it on yourself. If potential customers are reluctant to make a buying decision because they are not convinced that they’ll benefit from it, reversing the risk makes real sense. According to Stephen Fear, if you do this, you will get three times the volume of current sales and your turnover and profit will grow. John Lewis and Waitrose are exemplars of the strategy, which makes their customers feel safe – and the success of these stores is evident. Your outsourced bookkeepers may be aware of other companies in your area that practise risk reversal, and know how it has helped them develop.
Of course, you have to be confident of your offering, but that’s a given. You’re not likely to be in business unless you already have that confidence. You may get some returns, but they’re not likely to cancel out more than a small percentage of the extra income.
Enhancing Your Reputation
If you make it as easy as you can for people to return items or complain about a service, and hand out repayments without delay, your reputation for honouring this commitment will grow and the word will spread. People will realise that it is safe do business with you. The risk of losing out has been removed, so they can try out new products or get help from you without worrying about things not working out.
If you don’t already have a risk reversal strategy, why not give it a try for a few months and ask your bookkeepers to report on the effect on sales? You may find your profits soar in a way that enables you to move forward confidently in your growth objectives.