"You couldn't pay me to step foot in a mattress store ever again."
I said this a couple of years ago after our last mattress showed up on our front door in a box. It was glorious.
The entire experience was seamless, and I was promised 100 days to try the new mattress.
If I wasn't completely satisfied, they would pick up the mattress and give me my money back.
Many online reviews confirmed that A) they loved the mattress or B) it wasn't ideal for them, they appreciated the 100-day trial, and the company did return their money without causing any grief.
Casper has changed the entire mattress industry, and there are now dozens of competitors offering similar products with similar guarantees.
The traditional mattress buying experience really is/was terrible. You're expected to lay down for a few minutes on a few mattresses and eventually pick the one you think is right. And days later realize you made a mistake.
It's a transaction that places all (or most) of the risk on the consumer, especially in cases where there is no return policy or severely restrictive return policies.
Casper, in effect, said, "Order this online, sight unseen. Then, if you don't like it, we'll take care of shipping, costs, and fully refund you. We know that we have a fantastic product, so you're almost certain to love it, but if you don't, then that's on us, and we'll make it right."
When you can reduce the risk or even reverse the risk, then the only thing left for the buyer to consider is the value and benefits.
Online operators typically have much stronger risk reversal offers, because they know that they need to make up for the tradeoff of not being able to interact with the product beforehand.
For the rest of this tidbit, I want to drill into that concept of tradeoffs. I often tell my clients that strategy is simply the consideration of tradeoffs, and finding a way to create an advantage by leveraging them in our favor.
Tradeoffs
Long-time readers will know that one of my favorite books is Made in America by Sam Walton. Near the end of the book, Sam had some words of advice for the small-town businesses that felt threatened by Walmart.
He pointed out that while there was no way they could compete with Walmart on pricing or selection, they COULD compete very well on service. He knew there was no way that Walmart would be able to offer the same level of customer service or local knowledge as could be found at a small family business.
Sam understood tradeoffs and was encouraging his competitors to think that way… "We know that all else being equal, people pick the lowest price, so you should ensure things aren't equal."
In the mattress space, the online retailers knew that they were fighting an uphill battle, so they traded off risk with their superb return policies.
It's here where traditional businesses tend to fail - they had an incumbent advantage, a newcomer finds an enticing enough tradeoff to start pulling a sizeable chunk of business away.
Then it's up to the traditional business…
Will they respond by updating their tradeoffs, or will they slowly die?
If my mattress shopping experience is any indication, most are going to end up dying.
I recently found myself back in a mattress store going through that same old process.
When I asked the store manager about their sleep guarantee, his response was abysmal. He explained that they used to do a trial period, but no longer do, because:
"Not many people used it, and we had to increase our prices in anticipation that people would, so we just scrapped it and lowered our prices."
This is insanity, especially if we assume that it's true that not many people used it.
Why Reverse Risk?
When appropriately used, standard risk reversals dramatically reduce buyer anxiety and can increase sales in just about any business by 50-300%.
So what they were saying, in effect, was: "We made it harder for customers to feel comfortable buying, and reduced our profit and sales potential, because we were worried about what might happen, even though history and data showed us that was an unfounded worry."
Insanity.
Contrast that to a mattress retailer I was reading about recently - they invested in a soundproofed "Nap Room."
Here's how it worked:
Prospective customers could book a time slot between 1 - 4 hours in the room, with any mattress they were interested in buying. Staff would move that mattress into the nap room for the appointed time, and the customer could take a nap. They were allowed to bring in their pillows, or use ones from the store, whichever they preferred.
This is a brilliant example of dealing with tradeoffs. In essence, they said, "Sure, you could order online, but if it doesn't work out, best case, you're spending weeks on uncomfortable mattresses until you find the right one. Alternately, you can come in here and fall asleep. Make sure that this works for you. Then walk out of here with something you'll love, and have it immediately."
Remember that money is the easiest tradeoff to deal with, but it's not the only (or even the most important).
Amazon is "killing" retail because they found a way to tilt the convenience & cost tradeoffs in their favor.
Casper is doing such great business because they found a way to tilt the risk tradeoff in their favor.
Retailers are dying because they are unable or unwilling to discover the tradeoffs that they can tilt in their favor, and because they're unable to create a convincing message about why those tradeoffs matter.
Regardless of your business - your challenge for this week is to do the following:
- Identify the tradeoffs that affect your customers (both existing customers and prospects)
- Identify the tradeoffs that your competitors have successfully leveraged against you
- Identify the "best" response to dealing with those tradeoffs when your customers ask about them (or, even better, make them irrelevant as part of your sales process)
- Identify the tradeoffs where you outshine your competitors
- Identify ways to communicate your most favorable tradeoffs more effectively, and make them seem far more critical/salient than those where your competitors are winning
In many ways, this is like the process of making your skeletons dance (the practice of identifying your most significant weaknesses and turning them into strengths).
By focusing in on the areas where you have or can create a salient competitive advantage of your competitors, and determining the best way to communicate that to them such that you become the default option, you will create a fortress around your competitive advantage that will be very hard to disrupt.