Effective marketing (particularly B2B marketing) frequently involves building confidence and reducing the perceived risk to the targeted consumer or client. Consumers of goods or services may have different degrees of risk tolerance. Other than a few blessed “risk takers” and early adopters, most want to make a buying decision that is safe, substantiated and practical.

    When I was climbing the ranks during my marketing career, the adage was “Nobody ever got fired for buying IBM” (remember them?). In telecoms, we used to substitute Nortel (and later Cisco) for IBM, but the concept was the same. Although they often didn’t have the best product, IBM was the market leader in terms of brand awareness, market presence and sales.

    Market leaders are deemed to be safer bets than smaller players and start-ups. The smaller the market share and revenue, the larger the perceived risk of purchase. As I used to explain to my sales teams in the early days at QNX, they had to make two sales.  The first was to sell the company as a viable, committed partner.  The second was to sell the technology solution itself. Conversely, Microsoft sales reps had the luxury of making a single sale: the product/service.

    If you don’t happen to be one of the “top 3” market leaders (yet), or you’re in a greenfield market with no dominant players, it’s your job as a marketer to mitigate the perceived (and real) risk in the eyes of the purchaser.

    Here are three approaches that can be taken:


    Commercial Programs

    For products, one risk reduction technique is the use of comprehensive warranties (think Hyundai and Kia offering industry-leading warranties as they sought to establish a foothold in the North American market). Product evaluation programs, price guarantees, pre-defined upgrade policies and strong technical support are other commercial approaches to reducing buyer risk.

    It may be hard for tech start-ups to accept that the “best technology” does not guarantee buyer demand and long term market success. While these risk mitigation techniques seem obvious when you think as a consumer, technology start-ups with unproven products mat not understand the need to transfer risk from buyer to the seller in this way.



    Brand also plays a key role in risk mitigation and product adoption.  Establish stability, longevity, migration paths and positive customer experience as brand attributes for your product/service.  When combined with other risk mitigation policies and programs, this will further reduce the buyer’s hesitancy. Having referable customers from similar industries or markets is part of this approach.

    While obtaining references presents a “chicken and egg” dilemma for unproven products, they are nevertheless essential to gaining market traction (again, thank goodness for early adopters).



    Finally, establishing strong, sincere relationships with the customer, both pre and post-sale is also critical to risk mitigation. The sales team plays a key role in establishing these relationships. As we know, customers aren’t just buying a product (or service), but want to feel that they are important and are buying a trusted buyer-seller partnership.

    Marketers, particularly those charged with selling new products in “underdog” companies, should keep Ken’s first rule of marketing physics in mind:

    Action:  decrease the perceived purchase risk . . .
    Reaction:  increase the chance of a sale!

    The trick to marketing risk mitigation is using the right combination of commercial programs, branding and relationship building to forge your path to market leadership.


    This article was published more than 1 year ago. Some information may no longer be current.