The risk of doing business

Fear is a motivator unlike any other, and your sales pitch will have more power when it identifies, communicates, and eliminates risks that the customer may not know they are facing.

Sigmund Freud, the father of psychoanalysis, identified that human beings are much more motivated to take action to avoid pain than they are to gain pleasure.

Put simply, when we realise we are sitting on a nail, we want to get off it – fast.

When you are pitching to a prospective customer, make sure you fully explain the risks you are helping them to avoid, as well as the more aspirational benefits of doing business with you.

It helps if you think of what you are selling as a kind of insurance policy that protects the customer against things that could go wrong. Insurance isn’t the sexiest topic, but it is a huge industry – in Australia, it is worth $58 billion a year and employs more than 22,000 people.

Insurance is something customers understand, and although they may not like it, they are prepared to pay for it.

Your customer probably faces risks from many sources, including financial risk, operational risk, governance and compliance risk, risks to reputation, and strategic risk.

For example, right now, when businesses and government are facing an environment of constant change and disruption, strategic risk is an issue that is getting a lot more attention – and money.

A recent Deloitte study of 300 major companies around the world found that 52% had increased their budget for monitoring and managing strategic risks; 42% were monitoring this area continually; and 38% had increased the number of executives assigned to managing strategic risk.

Here is a simple five-point plan for identifying and presenting risks in your proposal.

  1. Start by dividing your page into three columns.
  2. In the left hand column, list the significant risks that the customer currently faces, before adopting your solution (aim for 5-7 risks).
  3. In the middle column, list the consequences and impacts of each risk.
  4. And in the final (right hand) column, explain how your solution will minimise or eliminate the risk.
  5. Try to keep the list as concise as possible so that it stays on a single page.

You will find that the customer’s risk of doing nothing is much greater than the risk of doing business with you.