“Aunt Carrie just bought a new van.

She spent about 45 minutes deciding which one she wanted. Then bought it.

The first time she saw it was the day she picked it up and after she’d already paid for it… from a company she’s never heard of before.”

I looked at my Aunt Barbara with some surprise.

Typically a car purchase is a major decision. It usually includes a long research time, finance applications, test drives and negotiating with a salesman.

But not this time.

45 minutes and done.

You might be tempted to think that my Aunt Carrie is a spontaneous person and this is just her modus operandi.

Not so.

She’s lived in the same house for over 30 years.

Highly conservative and thoughtful about everything.

And very frugal… sometimes to a fault.

So what would convince her to make a major purchase in such a short time? Especially when doing so was contrary to her nature?

Even more amazing is that this happened during times of high-inflation and a pending recession!

The answer holds a very important lesson for businesses everywhere that want to thrive in tough times.

It can be summed up in two words… which I’ll detail for you in a minute.

For now consider another example with a lower price point, but in a much worse economy…

In 2009, just after the United States entered a major recession, one of our clients presented us with a major problem.

Collectorz specializes in helping LP record , book, CD and comic book collectors organize and catalog their collections. It is a very unique niche, right?

They did some major updates to their software.

The major problem was two fold:

  1. Low Upgrade Rates – The last two updates had a very low up-take rate. Less than 8% of their list was upgrading, despite being offered serious perks and features in the new versions.
  2. Poor New Sales – Overall sales were low. When the economy is down, people tend to get tight with their money… even for a $19/month purchase.

As we discussed possible solutions, I realized that their offer was missing an important component.

This two word solution for getting customers to buy more that I referred to earlier… they didn’t have any kind of strategy to make it work for them.

We build a simple system for them.

The impact was immediate. Within less than a month more than 50% of their list moved to the new version and they saw an increase of over 39% in new sales.

So, what did they do?

In both cases – with my Aunt and with Collectorz – one thing made all the difference.

They implemented “Risk Management”.

I’m not talking about the company’s risk… I’m talking about the buyer’s risk.

In my Aunt Carrie’s case, the car dealership offered her a 10 day no-questions asked refund or replacement policy.

Buy now, drive it around, have a mechanic check it out… and if, after 10 days you don’t love the car, bring it back and we’ll give you a new one or refund your money.

EASY… and totally free of risks for the buyer.

For Collectorz, we implemented a full-refund policy… plus they got to keep the software… and we’d help them migrate to a different platform of their choice… if they didn’t love, love, love the new interface and features.

Again, ZERO risk for the buyer.

Why does this work so well?

Think about this…

When times are tough financially it adds a huge layer of stress and strain to buyers – both consumers and businesses.

Everyone feels at risk because they don’t know if their purchasing power will suddenly dry up.

Oftentimes, marketing managers, COO’s and acquisition departments feel this same pressure, they tend to tighten policies, watered-down guarantees, and actually increase real or perceived risk to the buyer.

In other words, they seek for ways to reduce THEIR risks, not the consumers.

Almost all airlines reacted this way during the COVID-19 pandemic. They went to great lengths to increase revenue streams for themselves, including charging more for food, baggage, seat assignments, and other services.

Southwest Airlines took the opposite approach and aggressively reduced the risks for the passengers.

The result?

Southwest substantially grew their market share while others suffered major market reduction and revenue loss.

For example, American Airlines, the top airline in the world, had a year-over-year revenue growth of -48.1% (ending Q2, 2022), with a total 5 year growth rate of -15.81%.

By contrast, Southwest had a Y/Y revenue growth of 114.39% (ending Q2, 2022) and a total 5 year growth rate of -5.02%… the highest in the airline industry (COVID-19 was a killer for these guys!).

By far, the best way to increase revenues and get more buyers during hard times is to create policies and systems to reduce risks for the buyer.

You can do this by:

  1. Analyzing market trends
  2. Pinning down your buyer’s current sentiment and key emotions
  3. Reviewing policies, prices and practices with a “Buyer Risk Management” mindset

When you wisely implement systems that make the buyer feel safe, they will purchase more… bring you more revenues… and reduce your risks.