Understanding the BuyerSphere Project, Part2.

Risk; when potential customers look at buying from your company, at some level they are assessing risk. Buyers want to reduce the risk in making a purchase, and of course purchases have varying degrees of risk.

In my previous post about The BuyerSphere Project, I mentioned three overlapping dimensions to consider – the product, the market and the buyer. Let’s focus on two of these , the product and the market.
If your company buys the same photocopy paper from the same supplier month after month without a problem, that is an example of a low risk purchase. You know what to expect, you know what it will cost, and no one is going to be putting their personal reputation on the line for picking up the phone and placing a routine order for more paper.

On the other hand, if you are responsible for acquiring new warehouse space in a new territory, that is a different story. It is more complicated (more can go wrong), it involves more money, and maybe you do not have a relationship with any commercial realtors there who can help you find the right facility, at the right location, at the right price. There is a high degree of institutional risk if you make the wrong deal, and a higher level of personal risk if you are the person responsible for signing the lease.

As a seller, knowing how buyers perceive the risk inherent in transacting business with you is a necessary step to effectively marketing and selling to them. The more a seller can do to lower that risk barrier, the less friction they encounter in closing the sale.

One way to see it from the buyer’s perspective is to plot your company onto a risk matrix, where the vertical axis is related to product, and the horizontal axis relates to your market.

In the first example I used above, making a repeat purchase of photocopy paper from a trusted supplier, the paper vendor could plot themselves on the lower point of the vertical axis when they look at the transaction from your perspective (as the buyer). The product consideration is low; it is a relatively low cost, it is a highly commoditized product offering, and there is not a lot of risk of anything going wrong. If the vendor is dominant in their market, or dominant in that you always buy from them, no questions asked, then they score well to the left on the horizontal axis as well, resulting in a low risk purchase scenario.

In the other example, the new warehouse, product consideration would be much higher, likely pushing well into the moderate to high risk quadrant. Issues of price, location, quality of the building and so on are all factors that can push up the risk barrier, creating friction for a commercial realtor trying to close the deal. The market consideration could also be higher, depending on factors such as the brand recognition and reputation of the commercial realtor. At its simplest, for a realtor to close the deal, they would need to identify the buyer’s perception of risk and do what they could to lower the risk barriers that are causing friction in the sales process.

The BuyerSphere Project book suggests several key product and market questions to consider to help marketers and salespeople plot their companies on the risk matrix, and I’ll take a closer look at those in Part 3.