Buying is all about mitigating risk while maximizing the reward. Savvy sellers know that they must demonstrate that doing business with them is the safe option and the right decision.
In our last blog we described “Buyers Risk” in detail and we listed the 10 most common types of risk. In this blog, we will provide some potential risk mitigation strategies that can be used to counter each risk situation. This is not meant to be an all inclusive list but rather one to get you thinking so that your organization can develop its own risk mitigation tool as part of their Sales Playbook.
Types of Risk & Risk Mitigation Strategies
The most common types of buyers risk within a hospital are as follows:
- Financial Risk:
- Customer Perception: Money is always tight for any new purchase.
- Risk Mitigation Strategies: First and foremost demonstrate value in the language of a hospital CFO. Return on Investment (ROI), Net Present Value (NPV) or Internal Rate of Return (IRR) are examples of common financial measurement terms. Be sure that you can prove your financial metrics. Examples can include a third party endorsement. Provide a variety of options in which your product may be financed or purchased. Be conversant in the usage of capital asset pricing models which rank different purchases in order of return. Be sure to consider trial periods, gain-sharing, pay per test, delayed billing, extended warranties and service support.
- Unfamiliarity Risk:
- Customer Perception: Risk increases proportionally if buyers are making a purchase for the “first time” or when buyers are unfamiliar with you, your product or your company.
- Risk Mitigation Strategies: Sell yourself by developing a strong business relationship. This can be accomplished through a discovery process that identifies the key issues and stands out in the buyers mind as very thorough and complete. Remember people love to buy but they hate to be sold. Make it easy for the customer to buy your product/service by providing a list of repeat buyers and key in on those who are respected in the industry. To reduce risk in buying from your company align your executives with “peers” who will educate them about your rich company history, product development, firsts in the industry etc. Then personalize it by making available customer site visits to your facility (if allowed), company testimonials along with industry related white papers that support your proposition.
- Personal Risk:
- Customer Perception: This is important to everyone involved in the process and it occurs when the buying influence contemplates what could go wrong if they recommend your product, service or solution.
- Risk Mitigation Strategies: Establish trust and credibility. This takes time and persistence. Develop a list of all the perceived risks by stake-holder and mitigate them. Then get all of the stake-holders involved and discuss how risks will be mitigated. Consider suggesting a group decision so that no one person gets the credit or the blame. Remember risk is personal. Remove the personal risk.
- Operational Risk:
- Customer Perception: These are concerns over the disruption of supplies or the breakdown of routine operational workflow during implementation.
- Risk Mitigation Strategies: To mitigate concerns about reduction in workflow, introduce your implementation planning and team. Walk everyone through the process and develop a checklist of tasks assigned to each stakeholder. Ask for input and offer to customize the plan to match their unique situation. Demonstrate flexibility. Once again provide a list of reference customers that will verify that workflow disruptions were at a minimum.
- Resource Allocation Risk:
- Customer Perception: “How much time will it take for everyone to learn the new process or technology or work in the new environment?
- Risk Mitigation Strategies: Change is difficult for most people until they see how it can benefit them. Be sure to get the customer involved with the process early and often. Provide a trial or evaluation time-line and use your list to check off the task assignments. Explain and identify your training resources and provide them with a competency checklist. In essence make it easy to buy from you.
- Performance Risk:
- Customer Perception: New technology is great when it works but what are the chances of a product recall or early obsolescence?
- Risk Mitigation Strategies: With every medical product there is always the risk of a product recall. The key is to demonstrate that your organization is equipped to “own the issue” with minimal disruption to the customer. Explain your loaner or replacement policy. Describe how you can update software via the internet etc.
Discuss your track record in managing through product recalls.
- Physical Risk:
- Customer Perception: “Is the product safe? What are the potential risks to the patient or staff? Does the product have all of the required approvals by the FDA or favorable ratings by ECRI etc”?
- Risk Mitigation Strategies: If it’s a new product explain thoroughly how the safety mechanisms have been incorporated into the design of the product based upon extensive customer research. Then explain the extensive testing procedures that are incorporated into the manufacturing process and that are supported by various regulatory agencies that approve your products. Be sure to describe where the product was clinically tested and offer investigator contact information. If a third party service such as ECRI has tested the product provide their test results.
- Time Risk:
- Customer Perception: “How much time do I need to allocate to investigate this purchase? What questions should I ask? Who should I ask? Do I have the time, energy and resources to conduct this investigation properly”?
- Risk Mitigation Strategies: Hospitals often use RFPs for this very purpose and often let the vendors educate them. The best way to mitigate this risk is through a sound well developed account management strategy. You can also mitigate this risk by describing the specific areas that each buying influence should be concerned about and educate them. Better yet provide them with a list of their concerns after you have listened clearly and understand their key issues. Why provide a list? Because they can get one from the web, their GPO or a third-party testing service. Make it easy for them and provide it. If your product, service or solution is best in class it won’t matter. You will stand out! For example: clinicians will be interested in features, functions and benefits, ease-of use, training and safety.
- Natural Risk:
- Customer Perception: Supply chain executives are well aware of risks associated with weather, natural disasters, epidemics, port closings and geopolitical events. “What natural risks should they be concerned with? This is easy-“Can the vendor deliver to us if a natural risk occurs”?
- Risk Mitigation Strategies: To mitigate concerns about your ability to deliver on time during periods of a natural disaster describe your contingency plan and provide an example of your on-time delivery report. Explain how your organization has developed its supply chain process to be flexible to meet the challenge by having redundant manufacturing capacity etc.
- Execution Risk:
- Customer Perception: Can the vendor execute the project plan and deliver on time and within budget? “What could go wrong during the implementation phase? How do we mitigate it?
- Risk Mitigation Strategies: You must be able to prove that you can execute. Every hospital has at least one horror story of a project that went over budget, took much more time than expected or had excessive cost overruns. Mitigate this risk by sharing your implementation plan and by introducing your implementation team. Share customer testimonials and the results of customer post implementation surveys. Share what unexpected problems you have had to overcome and how you were able to successfully complete the project. Make them feel comfortable that you will be a great partner.
Risk Assessment & Mitigation Tool
Here is a handy tool that can help you identify the buyers risk categories by stakeholder and the reasons for their risk. You can use the tool to rank the probability of each risk as being high, medium or low. Finally you can develop some specific risk mitigation strategies that your sales organization can use. This exercise should be done for every major product or project that you sell. Once you have done so share it with several customers and get their input. This validates your assumptions and strategies. It is required and not optional.
We hope that you find this Risk Assessment & Mitigation Tool helpful.
Image Credits: Google Images