The Offer Equation (AOM Series Part 2)

“You’re selling a black box.

To the customer, you’re selling a promise with a price tag, and that’s it. They don’t see the inside until they pay. It could be a load of garbage inside, or it could be awesome … but that’s irrelevant to the purchase decision…

Remember: when you sell information, you are selling results. And for some weird reason … Customers find it much more compelling to buy a TARGETED promise like “I’ll show you how I do market research” or “I’ll show you how to get clients on Upwork” than a BIG promise like “I’ll show you everything ever.”

Daniel Throssell

The ‘weird’ reason customers find it more compelling to buy a targeted promise instead of a broad promise has to do with the ‘offer equation’:

1. Raise the perceived Value as high as possible
2. Reduce the perceived Risk as low as possible.

Let’s dig into each…

Raise the Perceived Value

I like to think of this as the ‘Finger Snap’ rule.

Assume that your market would love to, if they could, snap their fingers to instantly solve their problem and have what they desire.

Zero work. No time involved. And they get exactly what they want, how they want it.

That would be the highest value for your clients (and for you too, probably).

And so the closer you can make your offer aligned with that ideal, the higher its perceived value.

Here’s a simple framework for thinking about this:

• Point A: What state are your clients in BEFORE they work with you?
• Point B: What state are your clients in AFTER they work with you?
• Bridge: How is your offer is the BEST way to get from Point A to Point B?

The larger the gap and the more desirable the destination, the more valuable your Bridge will be to your clients.

If your offer helps them cross a small puddle, it won’t have much perceived value. After all, they’re confident enough to do it themselves.

But if that gap is a giant chasm between two mountains?

Yeah, they’re probably going to need a lot of help. And your guidance is going to be perceived as incredibly valuable.

Reduce the Perceived Risk

Another way to think of this is increasing their certainty.

In a perfect scenario, you’d make your clients feel 100% certain they will achieve the promised result.

But that’s nearly always impossible, even in the rare circumstances where you can promise a 100% success rate.

Because even if you’re 100% certain, they might never be — no matter how many testimonials and case studies you include.

That’s why it’s usually necessary to reduce their perceived risk by offering to take on some of their risk yourself.

You do this by offering a guarantee.

Your guarantee can be conditional, which is where you require clients to prove they’ve put in some amount of effort before getting a refund.

Or it can be unconditional, where they can ask for a refund for any reason (or for no reason at all). Usually within a certain timeframe.

Or, it can even be performance-based. Where if they don’t achieve a certain result within a certain amount of time, they either get their money back or even don’t have to pay at all.

As you can see, with each one you’re taking more risk away from your client. Which also increases their certainty in achieving the result.

Because no business could sustain a strong guarantee for long without being able to deliver results.

Now once you’ve created a strong offer with a high perceived value and low perceived risk, it’s time to develop your Message.

And that’s exactly what we’ll talk about next.

Click here to continue to Part 3 of this series.