Assessing Buyer Appetites for Risk (Issue 787)

In which we are encouraged to explore the bigger picture of what our clients seek to maximize or minimize in purchasing our services.

I was riding a city bus from my hotel to a client’s office for an early meeting.  There were some seats open, one next to me, and some people standing.  At the second stop after I got on, a woman in her late twenties, very smartly dressed, eased gently down the bus aisle and asked if she could take the seat next to mine. I looked up from my phone, said, “Sure,” and moved to make room for her to sit.  On her left foot, the one closest to me, she was wearing a flip-flop sandal. On the other, a light gray foot and ankle immobilizer walking boot.

After a couple of stops, I turned slightly toward her and said, “Good morning…. How did you do that?”, nodding toward her immobilizer boot. 

“Oh,” she said, smiling without looking up from her phone, “I was wearing high heels at a party and I rolled my ankle and broke a bone.”

“Wow!”, I said, “How long have you been in the boot?”

“Several months,” she replied. “It comes off in a few weeks.”

“Oh, good. Just in time for summer.”

“Yes,” she laughed.

“So, do you think you’ll go back to those high heels again?”

“They looked pretty cute,” she said, smiling with just a touch of defensiveness. “Anyway, I’ve done this before. No big deal.”

I recalled, just for a moment, the instant I mis-stepped off a sidewalk in Petaluma, California, grossly spraining my left ankle. I was about her age at the time; the ankle never healed properly and still bothers me, occasionally.  “Cute?”, I thought to myself. “You would do that again, just to look cute?”

Ah, well…. People have different risk tolerances and what economists call “objective functions,” ways they balance the multiple variables in their lives within certain constraints and with variables that they want to maximize or minimize. I would go to great lengths to minimize physical injury; she would go to great lengths to maximize “looking cute in my high heels” apparently thinking nothing of physical injury.

When we’re exploring possible engagements or sales with clients, we’ll do well to understand the variables they’re seeking to maximize or minimize and the constraints within which they operate.

Generating value is typically part of buyers’ equations – how much value their investment in our services will generate, how soon they’ll earn that value, and how certain or uncertain is the outcome. Often, as sellers, we focus there, primarily.

Yet, there can be many other variables, including “looking good to others in the organization,” that influence purchase decisions more significantly than the return on the investment or the cost of our services.

Developing enough trust with our clients and prospects to ask questions like, “If this goes well, what will that mean to you, personally?” or “Where do you feel you’re most vulnerable if this project doesn’t produce returns as quickly as we’ve planned?” or “What variables (e.g. disruption, employee complaints, customer complaints, down time) do you need to minimize during this implementation?”  can help us structure our proposals and services in ways that help our buyers balance their equations.

(Issue 787)

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