In a recent blog by Rain Selling Risky Business: 4 Areas Buyers Perceive Risk in Sales by Mike Shultz, he reported on a 2005 study conducted by Bain & Company on how sellers and buyers perceive the delivery of value. Eighty percent of the 375 companies interviewed believed that they delivered "superior" value to their customers. While only 8% of the clients of those same companies reported that they received "superior" value.

One of the areas that reduces value is perceived risk. The greater the risk, the less likely a prospect is going to buy. One of the classic or instinctive ways prospects try to reduce risk is by asking for a lower price. But in reality, a lower price rarely reduces risk. The buyer uses price to try to reduce risk because it is the easiest thing to focus on. Unfortunately reducing price is also the most ineffective way to reduce risk.

As a seller, your job is to reduce their risk through your competence; tying your offerings or solutions to their desired outcomes and goals. You must understand their buying criteria and how their criteria relates to achieving their desired goals. Also, as a seller, you must seek to understand what personal risks may be at stake for the buyer. You may minimize all the corporate risks but not the personal risks thus causing a delay or a continuation of the status quo.

If you are trying to close a deal, be aware that cutting your price to incent the prospect to buy actually increases their risk. For the buyer thinks "Why didn't you offer me that price in the first place?" They also may see the price cut as manipulation and thus they see working with you or your company as more risky. Nobody wants to do business with someone who manipulates them. If they do buy, the will not trust you and work to always get a cheaper price.

If you have a prospect or client just strictly focusing on price to buy, historically, those are the most problematic customers to deal with.

Reduce risk in 4 areas:

• Reduce your risk as a sales rep by being competent
• Reduce offering risk by understanding their decision criteria and the desired outcomes and why those outcomes are important
• Reduce the risk of doing business with your company by showing company competence through client testimonials and having a good track record.
• Reduce price risk by offering a fair price and tying value to that price. Don't cut your price without getting something return or taking something away in your offering. (Basic principle in negotiating - "Never give without getting"). Always tie price to value.

Overall, the greater the trust the customer has in you and your company, the lower the risk is in doing business with you. I recommend The Speed of Trust by Franklin/Covey.