— November 9, 2018
We all know that bungee jumping is risky. After all, who in their right mind throws themselves off a bridge or a crane, hundreds of feet above the ground? But the risk we perceive is much greater than the actual risk. The chances of you dying when bungee jumping is about the same chance of dying when playing a computer game. You are four times more likely to be killed when riding a bicycle and 400 times more likely to die in a road crash. Yet millions of people who happily drive around each day would be unwilling to go anywhere near a bungee cord because of “the risk”.
Human beings are pretty poor at analyzing risk. That’s in spite of the fact that our brain is constantly trying to work out the risks of any activity in a bid to help our survival. If we constantly did things that were risky, then the human race would not last long. However, it seems our risk analysis is only good for things which go back a long way through human history. Modern things like cars, jumping off bridges and dealing with the Internet are so new, our brains don’t have efficient mechanisms to analyze them.
So what’s all this to do with your business website? Well, buying things is a risk. People avoid making purchases because there is a risk that they could buy the wrong thing as well as the risk of spending more money than necessary. Our primitive risk analysis systems kick in every time we are about to buy something so that we don’t waste our money.
Watch people in stores to see them analyze risk
Observing people in retail stores is a good way to see how people analyze risk when buying things. If you can’t spend time doing that, ask a retail salesperson and they’ll tell you how people shop.
Firstly, they have a good look at what they want to buy. They shift position several times so they can see the item from a variety of angles. They then touch the item, perhaps picking it up. Then they walk away. They go off to another part of the store, look at something else, or just wander around rather aimlessly. Then they return to the item they are considering and take another look. If there is any literature, they’ll scan that. Plus, these days they may also go onto their mobile phone and take a look at any information they can find online. Then, they walk away again, maybe even going out of the store, perhaps to get a coffee. They return a short while later, take another look at the item, pick it up and may even ask for advice from a sales assistant. If there are similar items on show, they’ll take a look at them. Eventually, they will either buy the item or just walk away.
People assess the risk of purchasing something by gaining as much information as they can about each item they want to buy. Only when they have sufficient information to make a decision, one way or the other, do they buy, or walk away.
The more information you provide, the better
To help people decide to buy you need to provide them with lots of information. But here’s the problem. The more information you provide, the more people want.
When the only information you could provide to a potential buyer was what fitted onto the packaging or on a label, they had no means of gaining additional material so they had to make the decision based on what they could get from the minimal amount available. However, nowadays, with the availability of information in great depth online, people have access to vast amounts of information. So, if you only provide a small amount of information on your products and services people feel as though there is “not enough” as they are comparing it with the extensive information they can glean on other items.
This will mean they see the potential purchase as riskier. The perceived lack of information makes people think it is more dangerous. In just the same way that people think bungee jumping is dangerous as they lack information to assess its risks properly.
So you have to provide extensive information on everything you sell to help people perceive a lower risk. You can see this happening with the humble packet of rice. Rice is rice, right? What information do you possibly need to help you reduce your risk of purchasing the wrong kind of rice? Well, the brand “Uncle Ben’s” has shown that people do want more information than can be crammed onto a packet. Earlier this year they launched an app which allows you to find out highly detailed information, including data on sustainability, for any packet of rice you are holding. Similarly, the Mothercare app provides a vast array of information to help purchasers become more confident in what they are considering buying.
Using apps to extend the information you can provide is an excellent way of reducing the perceived risk of purchase by significantly increasing the availability of facts and figures. In turn, this reduces the risk of purchase and helps increase sales.
Raise the trust levels
Another thing you can do to reduce the perceived risk of buying is to increase the trust levels of your business. People perceive lower levels of purchase risk from trusted brands than from companies they know little about.
Trust comes from the number of reviews you have – quantity is more important than quality. If you have mixed reviews, but thousands of them, that’s better for perceived risk reduction than a few reviews, all 5-star. So, work on getting more reviews.
Also, put in place a method of recommending what you sell. When friends recommend items to us, we immediately perceive them as less risky purchases because of that social link. So, help people recommend your products by creating easy methods of linking to your items, perhaps even rewarding people for the recommendations.
Finally, work on your branding. Well-known brands in each market are more trusted than products from companies without much of a brand reputation. The more well-known your brand, the more trusted it becomes and the lower the perceived risk of purchasing.
Four steps to reducing risk
To reduce the perceived risk of buying from your website you need to do the following:
- Increase the amount of information on every product and service; you can never have too much information.
- Pump up your branding; become well-known and trusted.
- Get more reviews; the number of reviews is more important than their star rating.
- Establish a recommendation system so people can share your items more easily.