Red Light, Green Light: Small Factors Add Up to Big Buying Decision

(5 Minute Read) The Subtle Art of Building Customer Confidence

Photo by Anastasiya Badun on Unsplash

👋🏼 I’m Alek, a repeat founder. I’ve built and sold one company so far. I share what I’ve learned from building companies in 5-minute reads every week.

Red Light, Green Light: Small Factors Add Up to Big Buying Decision

Recently, I decided to spend $400/month on lawn care. At the same time, I'm too cheap to buy a $20/month Netflix subscription. Why do we feel at ease when making some buying decisions and not others? How do we decide whether something is worth buying?

The price isn't all that matters. Small things add up. They can make you confident or doubt each decision. Here’s how.

Sleep Quality Solutions: Red Light

I’ve snored for years, and it’s only gotten worse with age. A new dentist suggested a professional mouthguard. I’d been using a simple one from Amazon, but it had started hurting my jaw and affecting my bite. If I kept wearing it, my jaw hurt. If I stopped, my snoring got worse. The dentist’s plan sounded promising. He’d improve my bite with Invisalign and make a custom mouthguard to solve the snoring. When I saw the $5,000 price tag, I hesitated. Here’s why:

1. Value of the Problem. Green light. On my own, I was stuck. I could choose between low quality or jaw pain. Neither option was appealing. This was definitely a big problem to solve. I would have gladly paid $5,000 to fix it.

2. Convenience. Green light. I wasn’t sure where else to look, and finding other solutions felt like it would be a lot of work.

3. Trust. Red light. I wasn’t confident that a custom mouthguard would help with jaw pain. The dentist told me that "jaw pain could always be a side effect, and I will do my best to mitigate it." I appreciated the honesty, but I was paying $5,000 for a "maybe" at that point.

2 out of 3 lights were green, but instead of buying, I decided to explore other options. After a few appointments, I ended up with a CPAP machine from an ENT doctor. It cost $1,200, a fraction of the dentist’s original solution.

Lawn Service Solutions: Green Light

When my wife and I moved into our new home in Virginia, we knew keeping up the yard would be a big job. Our 0.5-acre yard looked great, thanks to the previous owners, and we wanted to keep it that way. It would take us 2 hours a week, on average, to maintain the mowing, trimming, and upkeep. Plus, we would have to buy all the equipment, which wasn’t cheap.

We decided to see if a lawn service could make things easier. Half the people on our block used the same service. The prior owners of our house used them too. "Why not start there?" we thought. After a quick call, we got an estimate: $4,500 per year. My first reaction was, “That seems fair!” I was ready to buy, and here’s why:

1. Value of the Problem. Would I pay $45 for an extra hour or two every weekend? Yes. Our time is valuable, and the lawn service would give us more of it.

2. Convenience. They had already worked on our yard for the prior owners. So, they were able to provide an estimate over the phone. Any other lawn care provider would need to send someone to the house. Going with this vendor saved us that hassle.

3. Trust. Many of our neighbors used this lawn service. That told me they must be good at what they do, and their prices must be reasonable.

Each of these was a “green light,” giving us confidence to go ahead. If even one of these felt wrong, I would have started looking for other options.

Lessons for SolidlyAI

In these stories, trust made all the difference. The price was similar. The problem was high value. Other solutions were inconvenient to find. The dentist left me with low confidence in what I was buying. The lawn service team left me with high confidence.

As I build SolidlyAI, I'm always trying to learn from other companies. In this case, how can this game of red light, green light help my customers decide? Here's what this lesson reminds me:

• Understand the value of the problem you are solving. If you are solving a lower value problem, that’s fine! But your price needs to reflect it.

• Understand your customer’s other options. If competitors make it easy for customers to compare prices, then we need to either:

  • Be clear on why our service is worth the price, or

  • Be the cheaper option

• Build trust. When people see others trust your service, it is easier for them to trust it too.

Application: Red Light, Green Light

The "Red Light, Green Light" test can help improve your buyer's journey. Here’s a quick guide on how to put it to work:

1. Identify your value. Before you sell a solution, ask yourself, "How important is this problem?" It's fine to solve low value problems, but you only get to charge low value prices.

2. Improve convenience. Ask yourself, "Will customers have convenient alternatives?" If other solutions are convenient, chances are you'll get a "maybe later." Have a succinct explanation about why you’re worth it.

3. Build trust. Early on, get as many referrals and testimonials as you can. Share these on your website.

Play this game of red light, green light. Make buying decisions easier for your customers.

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By sharing my experiences, I hope to provide insight and advice to entrepreneurs facing similar challenges. Please leave a comment or email me with any questions.