Distributing risk across multiple clients

Sent by Jonathan Stark on December 27th, 2018

Offering guarantees of one kind or another is a great way to dramatically increase your prices overnight. It differentiates you from your competitors, reduces risk for your clients, and decreases price sensitivity and objections from new prospects.

But...

Eventually someone is going to invoke your guarantee. If you know what you’re doing, this will be a rare occurrence but still... you need to be prepared for it. My preferred hedge against this eventuality is to spread the risk out across multiple clients.

For example:

Let’s say you have a client who invokes a money-back guarantee. If they are your only client, you’re probably going to go out of business. But if they are only one client out of ten, it’ll probably register somewhere between “annoyance” and “bummer” - i.e., not an existential crisis.

You might be thinking:

“But even if I could land ten clients, I wouldn’t be able to service them simultaneously!”

Sure, if you only offer a single high-touch service (e.g., building apps or ongoing marketing execution or high-end video production), you’d be right. There’s very little leverage in high-touch service delivery. It’s relatively easy to spin up and the prices are on the high side, but it doesn’t scale well to multiple clients.

What you need to do is diversify your offerings by packaging your expertise at a variety of price points. Things like info products, productized services, training workshops, advisory retainers, and so on.

Doing so will broaden your customer base, give you more visibility into your pipeline, and provide the stability you need to mitigate risk on your high-priced offerings.

Yours,

—J


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