Find Ways to Reduce Risk to Get More First-Time Customers

Anyone who owns a business knows that getting first-time customers isn’t
easy. That’s because every purchase, big or small, represents a risk. In fact,
no matter how good, valuable, or inexpensive your product is, it’s risky. And
people don’t like risks.
On the other hand, we know that consumers make first-time purchases all
the time. We also know that people try new things to obtain well-established
benefits such as increased status, less cost, more convenience, or better
quality. But getting a customer to switch isn’t always easy. Unless your
customer has a self-identified paint point (not cool, too expensive, poor
service, unreliable), they will stick with the choice that is “good enough for
now.”
The secret to getting new customers–lots of them–is to research what risk
your product represents and then find a way to eliminate or compensate for
that risk.


Reduce Risk With Trial Offers


One way to reduce risk is to motivate trial. Instead of requiring a customer to
buy all of your product or service, let them try a little bit. These bite-sized
offerings present less risk, are usually less expensive (or free), and are an
effective way to reduce the downside of purchase.
Sometimes bite-sized offerings come in easy-to-identify packages, such as
free samples, limited-time offers, discounted first purchases, or trial-sized
products. Reducing the risk by paring down the purchase size minimizes the
barrier to trial.
Digital businesses are well-versed with the benefits of trial offers. Before
committing to a paid package, the company often allows people to sign up
for a week or a month. Mailchimp, SEMRush, QuickBooks, and many
business software companies use this model. Then, users can try out the
features to see how easy they are to use and figure out how they work with
other software.


Free at First


Sometimes you must remove every obstacle to get people to try. That’s why
more and more companies, especially new services, give people something
for free at first. Some of the most innovative businesses around offer free
trials. Are you considering getting Netflix, Hulu, Amazon Prime, or YouTube
TV? Sign up for a free trial first. You’ll get 30 days free, and you can cancel
anytime. Of course, you give them your credit card before you get your free
trial, and it’s up to you to remember to cancel. Easy to try. Easy to buy. But
maybe a little harder to cancel.

Eliminate Risk With Samples


When it comes to hard goods, customers also struggle with the risk of trying
a new product or service. And this is especially problematic in the DIY world.
The painting industry has created many creative approaches to make people
feel more comfortable with their options. Benjamin Moore has done a great
job of allowing customers all sorts of trial options, including paint sheets and
trial-sized paint samples. Others soon followed. Sherwin Williams now offers
9”x 14.75” peel and stick sheets. And most big box stores now sell eight-
ounce paint samples made to order.


Bite-Sized Service


For some large ticket items, it’s essential to get the customer to try early so
they can create lifelong commitments. That’s why bite-sized offerings also
work well in service industries. For years, banks have offered free checking
accounts to attract new customers, who are later offered bank loans, savings
products, and investments. The banks work on getting customers in early.
They sacrifice smaller, immediate profits in favor of lifetime value.
In another example, over the past few decades, healthcare systems across
the country have spent a lot of time and money developing top-notch
women’s and babies’ centers, based on the realization that births are often
the first time adults interact with a hospital. If a couple has a good birth
experience, they are more likely to return to the parent system for other
needs.


Tiered Offerings: Good/Better/Best


One of the most effective ways to draw in new customers is to create well-
defined tiers. These allow clients to choose their risk level while creating the
groundwork for the most premium offering. Airlines are a classic example of
the effectiveness of tiered offerings. Most flights offer economy (good),
business class (better), and first-class (best). First-class often costs hundreds
more than economy class. The airlines constantly tout the value of their top
tier, even forcing economy passengers to walk through the spacious first-
class cabin to get to their seats.
In recent years, the airlines devised their own version of the trial offer. If
first-class seats aren’t sold out at the full price, airlines often offer every
passenger the ability to upgrade when they check in, sometimes for less
than $100. This offer is removed once the first class is full. Offering upgrades
for unsold seats encourages more people to enjoy the luxuries of the first-
class experience, eventually persuading them to buy top-tier tickets.


Ready to Develop Your Own Risk Reduction Offer?


Trial offerings, free-at-first deals, and bite-sized offerings are all around you.
So take a look at your industry with a fresh eye. Which offerings do you need to create to attract first-time buyers? How can you reduce the perception of risk? Which small purchases make customers aware of your upscale offerings? Are estimates or seminars part of your trial offer? What are your company’s good/better/best options?
With a bit of time and creative thinking, you’ll be able to use find options that reduce initial risk and drive more people into your sales funnel. And once that happens, it becomes much easier to grow your business.