3 Types of Risk That Exist Across Industries

September 13, 2021 | FinListics Solutions

Whether it’s an irreplaceable employee quitting, the onset of a recession, customers leaving for a competitor, or any number of other business problems, companies face risk every day. 

 

As a seller, these risks present an opportunity to both help your customers and make a sale. To do this, you must connect the buyers’ risks and challenges to your solution so your customers can see the value of your product or service. 

 

You do not need to know every possible risk to your customers in their industry, but you should understand the major ones. These are the risks that influence your customers’ priorities—therefore, they’re the risks that you should address in your sales discussions as well. 

 

Risks tend to fall within three categories: operational risk, customer risk, and economic risk. Understanding these risks can, in turn, help you understand your customers’ biggest concerns and goals. Each presents an opportunity to solve a problem for your customers and earn their trust, leading to larger and more profitable sales in the future. 

Risk #1: Operational Risk

The first type of risk your customer is likely concerned with is operational risk, which deals with loss resulting from causes within the business, like people or processes. Companies have a lot of control, though not total, over operational risk.

 

As an example of operational risk, the business meltdown in 2020 showed the importance of having built-in, fast-and-easy-to-implement responses to disruptions to the supply chain. Many companies struggled to get parts and supplies necessary for manufacturing. Employment rates and surplus or shortage of skilled labor also affect the industry.

 

It’s important to understand your customer’s specific concerns in this area because these issues are top of mind for senior leadership. They can only think about so many things. If one of the major risks is disruption to the supply chain or retaining qualified personnel, then you can pitch your offerings with regard to those challenges.

 

You can position yourself as a trusted advisor (as opposed to a mere vendor) by looking at what a customer should be controlling. This might include items such as what the personnel situation looks like and whether there’s the ability to invest in technology. Failure to keep pace with technological advances, including internet security, represents a risk. Failure to prepare for a critical employee who’s hard to replace, such as an IT manager, is a risk.

 

Anticipate problems and offer solutions before the customer faces a crisis, and you’ll provide a considerable amount of value. 

Risk #2: Customer Risk

Like operational risks, companies also have a lot of control over customer risks. Even though customers want what they want and you can’t impose preferences, you can stay ahead of the curve. Companies can and should anticipate and respond to changes in consumer behavior.

 

Companies have to maintain current customers and attract new ones, and as a seller, you should know whether your customers are keeping up with the competition in this area. Walmart, for example, has invested heavily in online to remain competitive. Similarly, from a product standpoint, if the grocer Publix had not switched over to healthier, organic brands, it would have missed that trend and lost sales.

 

Shifting delivery models is another example of a customer trend that can be seen as a risk or explored as an opportunity. When customers started ordering more groceries online for delivery to their homes, stores that didn’t offer that option missed out. 

 

Customer risks and opportunities abound, and each industry has its own considerations. What matters to your customers are their customers. Think about your customer but also about their customers. Many sellers don’t make that connection.

Risk #3: Economic Risk

Lastly, buyers deal with economic risk, which typically involves factors outside of your customer’s control. Economic conditions, material prices, and competitor reach shift over time. You may not be able to help your customer with some aspects of economic risk, but there could be ways to help them mitigate the impact. 

 

In the past, companies leveraged technology to reduce costs, then put the savings back into developing new products or retaining more qualified personnel. By now, though, most of that low-hanging fruit has been picked. To deal with economic risk, they need to get smarter and more creative with their cost cutting, increased efficiency strategies. 

 

Timelines are shrinking too. Your buyer doesn’t always have time to react as quickly as they’d like to. As a seller, it’s important to understand most customers don’t want to wait eighteen months to get their money back. Can you help them break even in six months instead? Anytime there’s a recession, buyers want to speed up the process. 

 

Multiple economic factors interact to drive trends and initiate risks and opportunities. Companies want to know how to keep up with the spikes and shifts that create significant changes in demand for their products. Help them get there, but don’t always be selling either. Sometimes as a seller, it’s your job to maintain the account and assist the buyer with their day-to-day challenges.

Know the Risks, Know Your Customers

At the end of the day, much of sales success depends on your knowledge of a customer’s industry. Competitors within an industry share common circumstances, including risks that fall into the three main categories: operational risk, customer risk, and economic risk. 

 

Knowing what’s happening in the industry tells you something about what’s happening with your customer. Know the industry and you will know your buyer. Most importantly, you’ll be able to speak directly to the issues that matter to your customers. 

 

You may not be able to solve all your customers’ problems for them, but by understanding the risks they’re dealing with, you can make life easier. You can set them up with solutions that will minimize risks and maximize performance, and to most buyers, that is invaluable. 

 

For more advice on succeeding in sales, you can find Insight-Led Selling on Amazon.

 

Dr. Stephen G. Timme is President and Founder of FinListics Solutions, a company that helps B2B professionals develop greater customer insights and better demonstrate the value of their solutions. Before founding FinListics, Stephen was a professor of finance at Emory University and Georgia State University, an adjunct professor at the Georgia Institute of Technology, and a consultant for numerous Fortune 500 companies.

 

Melody Astley is FinListics’ Chief Revenue Officer. With a background that includes leadership and senior sales roles at Gartner and IBM, Melody is responsible for strategic business growth and FinListics’ sales and marketing engines. She leads workshops and presents at global conferences, such as Strategic Account Management Association (SAMA) and the RevGen Digital Summit.

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