In the financial trading community, there is a concept called “risk-on, risk-off,” or RoRo for short. It refers to the general market sentiment at a point in time. Simply put, if the prevailing trend is toward more risky and aggressive instruments (e.g., stocks, emerging markets), that is called “risk-on.” If the trend is toward less risky and conservative assets (e.g., cash, developed markets), that is called “risk-off.” Traders have evolved all kinds of complex strategies to deal with this indicator.
What does that have to do with selling professional services? It’s tempting to view selling as a series of RoRo moments, where sometimes it’s appropriate to take a risk and sometimes it’s not. Maybe the client has become complacent, and you need to shake things up. Or maybe the client seems overwhelmed, and you need to back off. It feels only natural to construct our responses to situations based on our readings of “risk-on, risk-off” coming from the client.
That might seem natural, but most often it’s more wrong than right. In selling, particularly in the complicated worlds of complex or professional services, we systematically make one mistake. We err mostly in one direction. We keep doing the same thing, expecting different results. We have a built-in bias to view the world as risk-off, and we need to shift our attitude toward risk-on.
People and Risk
Adult humans have a well-developed sense of fear and suspicion. Maybe it comes from our ancestors’ close encounters with saber-toothed tigers (that food looks enticing, but I’ll pass it up if I have to walk too close to the tigers). If we view the world as full of such threats to our existence, then we behave in a risk-off mode, being very careful.
If we view the world as risk-off, we will guard against a Bad Thing Happening. And if that means we leave a Good Thing Undone, we are fine with that decision. Who wants a close encounter with a sabere-toothed tiger, anyway?
But suppose the world is risk-on, and we constantly behave cautiously. Suppose we always leave Good Things Undone, not taking a small risk, never daring to take the next step forward. Suppose we are so afraid of doing “sins of commission” that we constantly commit “sins of omission.” That can end up very badly, too.
The world of sports has plenty of adages about this situation. No pain, no gain. Just do it. Swing the bat. Nothing ventured, nothing gained. As Wayne Gretzky put it, “You’ll never miss a shot you never take.”
Finally, add the dimension of time. If the Good Things are far in the future and the Bad Thing is here-now, we are likely to focus much more on the here-now Bad Thing even if the future benefit is much greater and well worth the risk. In fact, even if the Bad Thing is far in the future and the Good Thing is here-now, people tend to be very cautious about the future negative, even if it is smaller than the positive.
Again, we have sayings: A bird in the hand is worth two in the bush. Really? Unless you’re starving, turning down a two-to-one deal isn’t very smart. A poker player who constantly folds will never lose big, but he’ll slowly bleed dry. The suitor who never asks out the enamorata is never rejected, but nonetheless always dines alone.
Business is full of risks, to be sure. Hiring the wrong employee, investing in the wrong market, those things are real and we are right to worry about them. But in selling, the risk of not doing the right thing is a lot higher than the risk of doing the wrong thing. We act as if we are in a risk-off world, but in selling, more often than not it’s a risk-on world.
The saber-toothed tigers we face in selling seem to come in droves: The client might be offended. I don’t want to look unprofessional. If my price is too high they might not buy. That might be inappropriate. I don’t really know that area of finance. It’s too early in the relationship. They might not like me. They might go with my competitor. My peers won’t respect me. I might be wrong. I might say the wrong thing.
So we do nothing. We take the easy way out, the path of least resistance, all the while telling ourselves that we have avoided an imminent saber-toothed tiger. And sure enough, no tiger appears. By folding our hand, we avoid catastrophic loss. But we never win, or never win much. We act like the world of sales is risk-off when in reality it is far more risk-on.
Fighting Human Nature
The world of product sales approaches the problem as mainly one of motivation. Sales books and conferences are full of admonitions to get out there and try some more, it’s a numbers game, don’t take rejection personally, read this book, listen to that motivational speaker.
You probably don’t see yourself that way. You think motivational speakers are cheesy, and losing a widget sale pales in comparison to the agony of being told that your particular service just isn’t all that good. You need something deeper, something that really changes your approach to risk-taking. And reviewing the odds isn’t going to cut it. It’s human nature we’re dealing with here, and the brain is over-matched when it’s up against the heart.
Instead, recognize the powerful-positive role that risk-taking actually plays in sales. Unlike with saber-toothed tigers, the act of taking a small risk now actually lowers the odds of a big risk later. Yes—small risk-taking mitigates big risk. If you take risks, you lower the bigger risk.
Think of a vaccine. For the small pain of a shot in the arm, we gain protection against a plague. For the small risk of a hand extended, we gain greater likelihood of a conversation to follow. For the small risk of making a phone call instead of an email, we lower the risk of later emails being left unread.
The key to taking more risks lies in taking a broader view: the risk is not the risk of one transaction now; it is part of a series of transactions to happen over time. In that broader view, taking the small risk now is the least risky thing you can do.
This is where we part ways from our product-selling brothers and sisters. They have to sell widgets, pretty much one widget at a time. It is much easier for us, selling complex services, to envision relationships and lengthy time horizons. And that is the key to mastering the risk problem.
The world of sales is far more risk-on than we think; the environment is much more welcoming of small risks than we think. The key to beating risk lies precisely in taking the small risk of making that phone call, commenting on that shared intimacy, being transparent about your experience, and being open about your price.
It’s a risk-on world out there for those of us willing to see the bigger picture.