KYC 11 | Safest Product Choice

 

It is natural for business owners to aim at producing the best products in their respective industries. After all, who would want to buy products that are sub-par? Contrary to this, business growth strategist Mark S A Smith believes it is not about being the best choice out there that gets the sale but about being the safest choice, especially in our recent environment. He joins hosts Betsy Westhafer and Tony Bodoh on the show for a two-part series to talk about risk mitigation. In this first episode, Mark defines what risk is, how it impacts sales, and the four fundamental risk mitigation factors. He taps into the mindset of the leaders who are succeeding in crisis, why purchase decision risk matters, and what the two riskiest decisions leaders are making in the massive transition happening in the business environment. Don’t miss out on Mark’s great insights in this jam-packed show so you can make your product the safest choice and close the sale.

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Making Your Product The Safest Choice, Part 1 With Mark S A Smith

Risk Is The Poison That Delays Or Stops All Sales

We have an amazing guest, Mark S A Smith. I met this gentleman a few years ago. The moment we start talking, we couldn’t stop. He’s a fantastic individual, which is what you are going to get as we go through this episode. He’s one of those individuals who is a master at sales and the sales experience and he really understands human experience from that perspective.

He is also a master teacher. Mark is one of those people that every single conversation I have with him, I learn something. I also did attend his Executive Summit, which I learned a ton. My brain was so full when I left. He’s a natural-born teacher and that will also come through in this episode. We had a great conversation with Mark. It was so great that we decided to turn it into two parts. What you’re about to read will be the first part where we’ll be talking about risk mitigation. Tony, you can talk a little bit more about that. Stay tuned because we have two great episodes with Mark S A Smith.

It was fantastic to learn from him. In this first episode, we are going to talk about risk mitigation and the fundamentals that go into risk mitigation. How do you create risk mitigation in your sales process? As Mark talks about it, it’s not about being the best choice, it’s about being the safest choice. That’s how you’re going to be able to sell, especially in today’s environment.

He brings it home to what resonates with us. As far as what that means for your customers. I am excited to share this episode. Everybody will learn a tremendous amount from Mark Smith. We are excited to have you here, Mark.

Thank you, Betsy and Tony. It’s always a delight.  You two trigger in me new insights on a regular basis. I can’t wait to find out what we will uncover.

We were talking about how we have no idea of where this conversation may go and that’s the exciting part about it.

All of my decisions have an impact on how trustworthy I am in my company. Click To Tweet

That’s the great thing about working with world-class business leaders like you and Tony. Your depth is so extraordinary that you never know what is going to bubble up to the surface to address the issues. I can’t wait.

One of the things that I love about our conversations that you and I and Betsy have had as we’ve gone through the last couple of years is that we always find something deeper. Something that I never thought about that you brought to my attention in our first or second conversation a few years ago is this idea of risk and how risk affects the customer experience, especially in the sales process. We talk about that extensively together. I’m looking forward to hearing where you want to go with that and what that can bring out for our audience.

Enough with the self-aggrandizement. Let’s get into the conversation that our audience can value.

We’re not quite done with the self-aggrandizement yet. For our audience who hasn’t had the benefit of getting to know you the way Tony and I have, tell us a little bit about your career journey, where you are now, the types of work you’re focused on. Bring us up to speed on your career.

I’m a business growth strategist. I’ve been doing that for 30 years. I started off as an electrical engineer. I never did engineering but I’m a systems thinker. I’ve always been bringing disruptive technology to market. A disruptive technology is something that once customers understand what it does for them, they will never go back to the old way of doing business. A great example of that is mobile phones. None of us have landlines. Nobody that I know has a landline. It’s a complete disruption.

The technology is very difficult to bring to market because nobody knows what it is. They don’t know what to ask Google because they don’t even know the technology exists. Over the past 38 years, 30 of which I’ve been running my own company, I have been figuring out how to bring technology to market rapidly and accelerate the sales cycle as fast as humanly possible. Along the way, what I discovered is that perceived risk is the friction between the desire of the customer to purchase and the actual pulling the trigger and placing the order.

Risk delays or stops all sales. Click To Tweet

What I want to share with you is my insights around perceived risk and eight ways that we can mitigate that perceived risk, lowering it to the lowest possible place so the customers can, safely and securely within their mind, purchase. That’s the intention behind that. Along the way, I’ve worked with a lot of big and small companies. If you, the readers, have an interesting product you want to bring to market, let’s have a conversation. I’d be delighted to share with you some of my insights beyond what we’re doing here today.

Can you give us a little more context around your leadership summits? I know that they’re so high value and I’d like for our audience to have an opportunity to learn more about that as well.

The Executive Strategy Summit, which is an awful name but it describes exactly what it is. We help people who own and run businesses think like executives by honing in on strategy and understanding what strategy is. What I have learned is that 80% of business owners don’t understand strategy. They say things like, “We have a strategic plan.” That is an oxymoron. Strategy and plan are two different things. If you’re going, “What does that mean?” you need to consider coming to the summit because they are radically different. A plan is very different than a strategy.

What I’ve done is I teach people how to think like an executive. Because of the work that I have done with executives over the years, I’ve teased out their secrets. That’s what engineers do. They go in there and figure out how things work and then they turned it into a repeatable system. That’s exactly what the summit is. We work on your skillset, your mindset, and your toolset as an executive. As a business growth strategist, the company can only grow as fast as the executive expands their capacity to grow and as fast as they can bring new customers in.

Most of my work through the past three decades has been around up-leveling executive mindset and putting into place customer acquisition systems that are scalable and repeatable. The summit came out of that and the reason why is because it’s a whole lot easier to run somebody through a three-day event where I can get them up to speed than to work with them individually over the same 30 hours. They instead come with a group of people, learn all together, and walk out with insights and a plan.

I’m looking forward to being at your next one. It is going to be an experience that I would not miss.

KYC 11 | Safest Product Choice

Safest Product Choice: Perceived risk is the friction between the customer’s desire to purchase and the actual pulling the trigger and placing the order.

 

Thank you, Tony. I can’t wait to have you in the audience. It’s been years getting you there.

What fascinates me is how we have built this relationship completely over Zoom. It’s been three years in that process and it’s been phenomenal. We had you on our ProphetAbility Bounce Back Summit. You did a phenomenal job there. That got me thinking for the show that we wanted to get you on here as well. When we kicked this off, we often think about customer experience as the end of the journey. After the order has been placed and products are fulfilled, then we get into customer experience. Betsy and I have been teaching differently than that for a long time.

We say it’s all the way back before your customer is even a customer, before they’re even a prospect, before they’re even aware what are the subconscious things. You are a critical part of that process and understanding what the experience is. While security is always an issue, especially nowadays, there are a lot of different versions of feeling secure when the customer has your product or your service. That sales process, I never thought about how important it was to feel that security and that mitigation of risk right there. Talk to us about that.

Let’s talk about what risk is. Risk delays or stops all sales. It is the poison of all sales. Risk is fear objectified. That’s all it is. The reason why it’s fear-objectified is because no executive would ever say, “I’m afraid.” Instead they say, “I sense risk.” Everything you know about fear we can apply to risk. A risk or fear is a belief in an undesired outcome potentially occurring. The opposite of fear is hope, which is the belief in a desired outcome occurring. They’re the opposites of the two poles. The typical risk analysis may not address the underlying fear, which may cause the analysis to be incomplete. For that reason, we need to dig down and understand what they’re afraid of.

Keep in mind that risk is always a judgment. It’s true. My middle son bombing down the slopes on his snowboard fearlessly, doing things that I would never ever attempt. It’s the same slope, same moment in time, two different judgments on what is risky and what’s not. What’s risky to one person is riskless to another, and experience decreases the perceived risk. For example, if you’ve worked with a company before or you bought from them before, you had the brand experience. You consider that purchase to be substantially less risky than if you’ve had no experience with it at all. Experience is one of the ways that we eliminate risk. The fundamental mitigation factors that we’re going to look at is experiences. The next is education. When people are educated, they feel things are less risky because they feel like they have a better control of the circumstances. The next is equipment. Equipment helps us mitigate risk. That’s why we wear helmets, gloves, and masks. That’s all about mitigating risk. The final one is environment. If the environment is wide open, there’s low risk of getting any infection. If it’s tight, people are afraid they might catch something from somebody else.

Understanding the fact that we have these four factors come into play, education, experience, equipment, and environment. We can bring some of those into play to help reduce the perceived risk. It’s like guardrails and things like that. A good example of that is, Tony, I know you have two young daughters. When they started off wanting to drive cars, they had no experience and they had no education. They had equipment, your car. They had the environment, the roads of Nashville. If during one of those nasty Tennessee thunderstorms that come through and if they have limited experience and education, you’re not going to let them out in the car because the environment is outside of their control. If they have been driving for a number of hours, they have had driver’s education, they drive that great big heavy car that you have, and you have them out in the sunshine during the daytime, you know that the risk involved in them being out driving is low, but you won’t let them go out at night. You won’t let them go out in the rain. You won’t let them go out and drive their friend’s cheap car. Those are all ways that we can take a look at risk.

Rethink the word sales cycle into consideration cycle because your sales only take as long as the customer takes to consider. Click To Tweet

Using the example of the kids that’s driving is exactly the example I use when I’m teaching people about the perception of a challenge and how we get into overwhelm. It’s interesting how this aligns. You and I have had these conversations before, but this is a new bent for me in thinking about it from the challenge perspective and how that’s risk.

One of the things I am interested in your perspective is with what’s happening with this massive transition in the business environment and thinking about risk. You talked in the summit about mindset, skillset and toolset, what are you seeing in terms of the mindset of the executive leaders that you’re talking with?

Those that are successful have overcome the sphere. They’re operating at the top level of Maslow’s hierarchy of needs. They’re seeing the facts as they truly are. They are connected with their heart. They’re not in fear, they’re in hope. They understand that what we have to do is help pull our employees, our team, and our customers out of the lower two levels of Maslow’s which operate in fear. A fear for your life and a fear for your capacity to live well.

In Maslow’s, the bottom two levels are fear-based. The top three levels are hope-based. As we ascend Maslow’s hierarchy of needs, we have increasing cognitive capacity. At the bottom of Maslow’s, we can only think of one thing at a time, “I’m starving, I need food, I’ve got to go to the bathroom right now, I can’t breathe, I need help.” That’s a single factor in Maslow’s lowest level. At the top level, we can handle 10, 20, 30, 50 things at a time. It depends on your cognitive capacity. Leaders who understand this, which we teach cognitive capacity as the primary tool, the primary resource of executives. It’s the ability to handle complexity. We do everything we possibly can to manage that cognitive capacity and part of it is mindset.

Let’s talk about the effect of risk on purchase decision. Keep in mind that every purchase decision has career impact. The reason why is because the only way you can make serious money in the corporate world is by being promoted. You can’t get by with that lousy 2%, 3% per year raise, you have to promote yourself up. In a corporate environment, decisions are a risk versus reward evaluation. The question is, “Does this purchase make me more promotable or less promotable? Will this impact my career if it goes well? Will it have a negative impact if it doesn’t go well? How will my scorekeepers take a look at this decision? How can I make my scorekeeper look good?”

I had a conversation with Mark DiMassimo. He was talking that he recently did some research and found out that most of the time, the people he’s working with are thinking about what their boss two levels up are thinking. Interestingly, the answer that he has gotten from his research is what the boss two levels up is thinking is, “What are my customers thinking?” The whole point here is that if you make a good purchase decision, you’re promotable. If you make a purchase decision that goes bad, “Is this going to have an impact on my career?” The reason why is because every decision, either good or bad decision, it takes eleven positive experiences to overcome a single negative experience. Maybe even more, depending on the impact.

All pandemics end. All bleeding stops. All crises come to a close. All wars come to a conclusion. Click To Tweet

The whole point is that if we have an unresolved negative experience as somebody making a purchase decision, it has a substantial impact on our capacity to be promoted. The boss will never promote somebody to their inner circle that would embarrass them, just like their boss will never promote somebody in their inner circle that would embarrass them. There is an impact chain up the corporate structure based on the fear of making a decision that will be perceived as being poor judgment. This also works for relationships. The reason why people get divorced is because their spouse or they make bad decisions sufficiently to the point that they’re no longer trusted.

The piece that stands out to me here is how Betsy and I have talked a long time about how business-to-business isn’t about business, it’s person-to-person. You’re hitting it on the head here. People often told us, “Business-to-consumer, customer experience is so much different than business-to-business.” In reality, it’s not. It very much is in the early stages about risk mitigation. Is this product going to serve me in my needs whatever those may be? Often, it’s about how it affects me as an individual.

And my relationships with other people. I can take hits. If I make bad decisions and it’s just me, nobody knows and nobody cares. The moment that I’m in a relationship, all my decisions have an impact on how trustworthy or consistent I am. That’s where it comes into play. As consumer, you always have a spouse, a girlfriend or boyfriend, a family, mothers, fathers, aunts, uncles, cousins, brothers, sisters, all have an opinion about that decision. It impacts that. Corporations it’s just up the food chain.

It sounds like the self-image aspect of this comes into play as well. It’s not so much what I think of myself, which is a key element of the buying, but it’s what I think others think of me. That’s what matters here.

Let’s talk about how customers look at the risk of a particular purchase. To explain this, I have a simple four quadrant model. As consultants, we love four-quadrant models. It organizes chaos. We bring clarity to our thoughts. On the horizontal axis, at one end, we have a low perceived purchase risk. At the other end of the axis, we have high perceived purchase risk. That is perception. If they’ve never bought before, we’re on the high end. If they’ve bought over and over again, we’re on the low end.

To make this interesting, let’s add another vertical axis which is, is this within your personal approval limit or is it above your personal purchase limit? Everybody has a purchase limit. In corporations, people have signature authorities. $2,500 to $5,000 at the lower level, $100,00 at the upper level, above that you have to go to the board of directors. Everybody has a purchase level approval. Even we do personally. How much money do we have in our bank account? What do we have available in credit? What does our spouse allow us to purchase without asking somebody else? For example, Molly and I have an agreement that anything below $500, if you want it, get it. Anything above $500, let’s check in. Of course that rule doesn’t apply to Molly. You all are laughing because you know it’s true.

KYC 11 | Safest Product Choice

Safest Product Choice: A risk or fear is a belief in an undesired outcome potentially occurring. The opposite of fear is hope, which is the belief in the desired outcome occurring.

 

The point is if you have a purchase that’s within your signature authority and considered to be a low perceived risk, this is a very low consideration, low resistance purchase and it happens fast. Even if you have purchased again and again, if it’s above your purchase authority, it starts to become a higher consideration, higher risk. The reason why is because this has to be approved by somebody else who has a different view of what’s risky and what’s riskless. There’s this chain of consideration and it slows things down. If you have to get approval, it slows things down. There’s an issue there. If you have something that you perceive as being high purchase risk within your purchase authority, it’s still is a high consideration, high resistance purchase because if things go wrong, you still have to explain yourself. That causes career risk.

If we have the upper right-hand quadrant where we have high perceived purchase risk and above the personal approval limit, this takes forever. This is where you have 123-year purchase cycles because of all the work that has to be done for that due diligence to reduce the perceived risk. What I want to do is have you rethink about the word sales cycle. It’s a consideration cycle. Your sales only takes as long as the customer takes to consider. If we can reduce the consideration cycle, you speed the sale cycle. The question becomes, how can we reduce the perceived risk of the buyer and their boss? That’s how we speed the sale.

I love the nuance of the phrasing, consideration cycle versus sales cycle. I have a question with regard to risk and being that we’re in the throes of something none of us have ever seen before. What do you think is the biggest risk that executives are either knowingly taking or unknowingly taking?

There are two risks that I see them either knowingly or unknowingly taking. Number one is communications. They don’t communicate nearly enough. In time like this, that communication helps reduce people’s concern. As we fill in the details, remember it’s education, experience, equipment, and environment that set up the risk equation. We have to communicate about what have we learned. That’s education. Experience is, what have we experienced? What have we done to manage this? Equipment is, what are we doing to improve it? I walked into the Whole Food store and there was a sheet of plexiglass between me and my favorite cashier. No hugging and kissing that day. The environment. Summer is coming on. We’re getting a lot more UV light. The virus does not survive for very long at all in the sunshine. I’m going out without sunscreen. Forget the skin cancer, let’s get some vitamin D.

You have to communicate about what you’re doing. That’s the first thing. The second thing is conservation. You have to conserve the right things. I see executives that shut off every purchase. That’s not prudent. The reason why is essentially what you’ve done is you put the brakes on your business. Those who are willing to venture forward into the unknown, knowing that this is going to end, all the pandemics end, all the bleeding stops, all crises come to a close, all wars come to a conclusion. You know this is going to be over. You have to prepare for the next transition out of here. Companies that are stopping marketing, sales and education are those that are at risk to not surviving the restart. Those are the two things that I see and I’m working with my corporate clients around managing appropriately.

To sum up our conversation around a consideration cycle, the biggest business mistake is using low consideration sales tactics for high consideration deals. A low consideration tactic is, “If you can buy now, I’ll knock off twenty points.” That’s bad. It leaves money on the table and you haven’t understood what’s the friction to the deal. Price is rarely the true friction to the deal because if they can’t afford it, they’re not going to even look at it. There is a self-filtration. What we want to do is talk about how then can we make this pivot to using high consideration methodologies to reduce this perceived risk. There is a key sales pivot that I want you to think about. The role of the sales professional is not to persuade prospects that this is the best product, but to reduce the perceived risk to the point that the prospect feels that this is the safest choice.

Companies that are stopping marketing, stopping sales, and stopping education are those that are at risk of not surviving the restart. Click To Tweet

Best is a judgment. We’ve already talked about that. A sales person comes to me and says, “Mark, we got the very best product in the world.” I say, “Bull and I can prove it.” “What are you talking about?” “Do you have competition?” “Absolutely.” “Are they good?” “Yeah.” “You’re not the best for that group of people.” Stop saying things that people can disagree with. We want to become the safest choice. Best is a bad strategy other than comparing your three good, better and best. That’s the classic way of presenting three different options. People usually buy the middle option, but that’s between your product lines. It’s not yours and somebody else’s.

What a great show. Being able to listen to Mark talk about these fundamentals and the foundation of risk and risk mitigation and how to do it, it’s got me thinking differently about what we do in our businesses. If you think about risk, safety and security, it’s such a big issue in most companies, but even more so right now.

What strikes me about a conversation like that is risk mitigation can be a dry topic if in the wrong circumstances. Mark makes it interesting, exciting, challenging, and he helps you understand why you have to pay so much attention to these kinds of things. It’s a great conversation and I can’t wait to share the second part of this conversation.

It is going to be fantastic. Please come back and join us for the second part because we’re going to dive into how you apply these foundations.

Thank you once again for joining us on the show.

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About Mark S A Smith

KYC 11 | Safest Product ChoiceMark’s forthcoming book, Scale Your Business, Now! summarizes what he delivers. He works with business owners and executives on how to take back control of the business and guarantee more profits in the next 120 days. He helps his clients regain freedom, exert influence, and manage predictable growth.

Heading his own boutique consulting company since 1990, he’s researched & developed executive leadership, business models, and go-to-market methods to predictably conduct successful executive-level meetings when multiple people must come to a conclusion to make important decisions. The result: his clients sell complex, expensive products and services as fast as humanly possible.

Mark is an electrical engineer, media technologist, computer programmer, hardware salesman, software marketer, business owner, executive coach, author, professional speaker, video producer, podcaster (The Selling Disruption™ Show), blogger, musician, and father of five Millennial children who do not live at home. He’s worked in 54 countries and six continents.

Mark’s authored many books, business case assessment tools, sales playbooks, go-to-market strategy guides, sales channel launch plans, business plan tools, video-based training systems, corporate webinars, and hundreds of articles and blogs. Books include Pivot to Profit from IT Disruption, Security in the Boardroom, Linux in the Boardroom, Guerrilla Negotiating, Guerrilla TeleSelling, & Guerrilla Trade Show Selling. Forthcoming: Scale Your Business Now! and Executive Temperament: Playing to Win in the C-Suite.

Clients include Arrow Electronics, Agilysis, AMD, BEA, Broadcom, Bakerson, Bullseye Capital, CDW, ConnectWise, Commvault, Dell, ePlus, Forrester Research, HP, Hitachi Data Systems, Microsoft, IBM, IPED Consulting, Internal Consulting Group, Ingram Micro, Insight, Tech Data, Living Fuel, Oracle, Raytheon, Ruckus, NetApp, Sanmina, Sugar CRM, Synnex, Lexmark, VLCM, Viavi Solutions, Zones, Society of Government Meeting Planners, National Speakers Association, and Meeting Professionals International.