Are Your Customers Risk-Takers? When And How To Use Risk Tactics To Improve Conversions
Do you know how risk is affecting your customers? Columnist Jeremy Smith reveals some ways to determine your users' risk appetite and techniques for dealing with it.
Every customer who completes an act of conversion on your website does so in the face of risk.
Risk is part of every e-commerce transaction. It’s not the same type of risk or risk level of, say, jumping from your second-story window into the swimming pool, but there is a risk, nonetheless.
As a conversion optimizer, you must recognize that reducing this risk — no matter how seemingly small or insignificant — is your job.
How can you reduce risk and its close cousin, user anxiety? There are tactics, strategies and methodologies that are proven to push risk downward.
As a result, conversions rise.
If you want to really understand risk, you need to understand how risk affects your customers.
Here’s what you need to know:
Each Of Your Customers Has One Of Three Attitudes Toward Risk
Risk theory posits that there are three primary attitudes about risk. Each of your customers will fall under one of the following categories:
- Risk-Averse: These people hate risk. They will do everything they can to avoid it. They want surety, confidence and zero risk.
- Risk-Neutral: People in this middle-of-the-road group aren’t really sure whether they like or dislike risk, or they simply don’t think about it enough to worry.
- Risk-Seeking: These are the life-on-the-edge people who love thrills and don’t mind taking edgy, electrifying and risky actions.
That’s a neat and tidy way to view the customers on your website. Reality, as is often the case, is a lot messier.
Different people respond to different types of risks in different ways. Let me explain this with an example:
One person may be extremely risk-averse when it comes to vehicle safety. He drives an ultra-safe car, drives extremely cautiously and does all he can to maintain car safety.
And then, he smokes a pack of cigarettes every day.
On the one hand, he is risk-averse regarding vehicle safety, but he is risk-embracing when it comes to the personal health issue of cigarette smoking.
To bring the example closer to the realm of conversion optimization, consider a rock climber. He is determined to scale dizzying heights that scare the crap out of ordinary humans. He buys his climbing gear online.
In the realm of rocks, he’s risk-loving.
But he is resolute about only buying equipment backed by a solid no-risk guarantee.
We all exhibit varying levels of cognitive biases and irrationality.
The important thing to keep in mind is this: Some users will respond negatively to any risk factors on your site.
Your responsibility, then, is to know your users. You must determine how to address risk in the right way for the right customers.
Look at things from your customers’ perspectives. Understand their appetite for risk, the types of risk they embrace or reject, and how that affects their willingness to convert.
It gets a little complicated, doesn’t it?
Not really. The bottom line is this: Know your customers.
Learn How Your Customers Respond To Risk
If you really get to know your customers, you’ll realize that they skew in a particular direction when it comes to their risk appetite.
First, let’s make sure that you have a clear understanding of the different areas of risk:
- The “risk” of the product itself.
- The “risk” of being on the website.
- The “risk” of entering their email address.
- The “risk” of clicking on certain buttons, particularly CTAs.
- The “risk” of submitting payment information.
- The “risk” of receiving or not receiving the product or service they ordered.
- And so on.
There are myriad risks that crop up during any e-commerce experience.
How do you figure out your customers’ risk points?
You can conduct user surveys. Ask customers or users to test the product, website or whatever. You may need to incentivize this process. The User Testing website is a great resource.
With this kind of real-person analysis, you begin to understand areas of oversight and neglect on your website, as well as which issues on the site could register a user’s risk sensitivity.
Some sources of data are also helpful for risk analysis. Tools that provide click-tracking show you where users are getting stuck, getting distracted or interacting with your site.
Here’s a heat-map depiction of click-tracking a web page from such a tool:
Even your conversion optimization rates, when combined with other user data, can suggest areas of potential risk that could be reducing your overall conversion rates.
Rather than depend on guesswork and hunches, however, it’s best to conduct actual tests with real users and to understand both their risk points and risk appetite.
Once you’ve determined the relative risk appetite of your users and the various points at which risk could cause conversion decline, it’s time to formulate a methodology for dealing with it.
Obviously, you should conduct split testing on every potential change, but here are some starting points for those changes.
Risk Reduction Techniques For The Risk-Averse
Customers who are the least tolerant of risk are the most difficult to please.
Halting negative or delusional user behavior before it begins is your best approach. However, you need to realize that there is simply nothing you can do in certain situations to keep some people from freaking out.
Here are some things you can do:
1. Offer a blow-your-mind guarantee.
One of the best strategies for skittish customers is to go out of your way to soothe their risk sensitivity with a guarantee that’s above and beyond the usual.
Often, guarantees look something like this:
That’s not a guarantee. That’s a scary looking legal document. Few risk-averse people will spring for that.
Even this guarantee might be a little bit restrictive:
Here’s something a bit more solid:
Rather than expect your users to absorb any risk, you, as the retailer, should assume a risk.
2. Don’t send any irrelevant messages.
Risk-averse people will jump at the slightest sound of risk.
Your approach should be to avoid anything that can appear risky. Here are some examples of elements to stay away from:
- Legal language in your website footer or email signature.
- Warning popups anywhere on your website.
- Small print.
- Anything that says “Please note,” or “We assume no responsibility… ” or things like that.
A simple website is better than a complicated one.
Take this random example, for instance: cookies. Unless you are a business operating in the UK or EU, you don’t need a cookie message.
Here are some additional ways to proactively reduce risk for risk-averse customers:
- Offer a money-back guarantee.
- Explain how your product is safe.
- Highlight the value of the product compared to its cost.
- Provide citations that buttress your assertions.
- Present verified testimonials.
- Show short videos of your products in action.
- Demonstrate the results of using the product or service.
Handling Risk For Risk-Neutral Customers
What about the customers who are on the fence about risk? They’re pretty much laissez-faire when it comes to risk.
The situation is actually tougher than it seems. These people are unpredictable. Whereas risk-averse users tend toward irrationality, risk-neutral customers can be random in their response to risk.
Even though such customers may not demonstrate a strong proclivity for or against risk, they must still be indulged and persuaded through the conversion process.
Here are three techniques to successfully deal with risk-neutral customers:
1. Show how your product fulfills customers’ needs.
Often, risk is the farthest thing from these people’s minds. The risk-averse are on risk high alert. The risk-seeking are drawn toward activities and behaviors that look or sound risky.
But the risk-neutral? It doesn’t even register.
Instead of obsessing over guarantees, stripping out legal language and eliminating warning messages, just focus on your customers’ needs.
These customers have one thing on their mind: their need and how to meet it. Your marketing message should cater directly to that.
B2B customers are often risk-neutral. They are spending their company’s money, and they’re just looking for function and fulfillment. Risk? Who cares?
Epson’s printer landing page speaks directly to this class of customer. Their image slider (poor choice) is benefit-focused and does not attempt to address risk at all. Why should it?
2. Avoid mentioning risk in any fashion. These customers don’t care.
A risk-driven strategy will backfire. Promoting your guarantee, your free shipping, your satisfaction policy or other risk-combating techniques may do more harm than good.
3. Promote value above all else.
One of the most powerful techniques in marketing is proving your value.
A product’s value is strong enough to defeat the most stalwart purchase objections. By trumpeting your product’s or service’s value, you will be putting yourself in a strong position to improve your conversions and make a sale.
For The Risk-Loving, Promote Risk As The Value
I have the most fun with conversion optimization when I’m dealing with a risk-loving customer demographic.
Many times, I see a risk-eager attitude in extreme sports, entrepreneurial environments, outdoors companies and male-dominated markets.
With risk-averse, you focus on the safety of your product.
With risk-neutral, you focus on the satisfaction of the user’s needs.
With risk-loving, you focus on the risky nature of the product or service.
Risky? It’s back on the menu.
Take Red Bull as an example of a company that uses high-risk behavior and activities to promote its product. Red Bull’s YouTube channel is jam-packed with some of the riskiest sports activities on the planet.
In the above video still, I see a young man ninja-kicking some sort of barrier. ROCK ON!
Red Bull knows that they’re targeting testosterone-fueled adrenaline junkies who don’t play Monopoly very often.
The more extreme, risky, fear-inducing, the better.
Monster Energy does the same thing, with a slight bent in the testosterone direction with their tendency to promote the Monster Energy Girls, who are described as “high voltage.”
Sounds risky to me.
Crossfit aficionados are all about the risk attitude, as well. To me, throwing around large objects and jumping from unsafe heights sounds risky. For Crossfit lovers, it’s the risk that appeals to them. That’s why, if you’re selling Crossfit stuff, you may want to up the risk ante to appeal to the risk appetite of these customers.
Risky pictures always work.
Strong language tends to appeal to risk-eager customers. Grant Cardone caters to high-energy salespersons and entrepreneurs, an inherently risk-loving group.
Cardone’s own high-octane personality and selling power reinforce his risk-eager approach and help to sell his products.
The product page for the wristband is all about risk. Listen to this language:
Champions do not bother thinking about the competition. They don’t think about the other people who are out there getting in your way. All they do is rise up above everyone else and dominate the entire sector.
Cardone doesn’t waste space talking about his product guarantee or shipping options. He talks about the sector-dominating attitude you need to have.
Risk-eager customers tend to be price-insensitive. You don’t have to worry as much about guarantees, legal language, refund statements or free shipping issues.
Axe’s potentially off-putting ad series was completely risk-focused. Why? Because they were targeting a demographic that is typically seen as embracing risky behavior.
Patagonia’s customer base is adventure-seekers (or those who want to be seen as such). An ad like this is in-your-face and has an underlying tone of risk.
Even this website for men’s razors has a risky sizzle — “Straight razors. Try a cut-throat razor.”
If you’re into cutting your throat with a razor, buy this one? Yeah, that’s the risk of a straight razor. But what the ad says is, if you’re hard-core, this is the razor for you.
The risk associated with the product, and even its purchase, make it appealing.
This concept flies in the face of typical conversion optimization advice, which is all about reducing friction, alleviating anxiety and promoting safety.
All of that is necessary and good, but only when the customer and situation demand it.
I never was much in line with “typical” advice about conversion optimization.
The bottom line on risk is this: Sometimes it’s good. Sometimes it’s bad. It just depends.
Depends on what? Your customers.
- Fight risk when your customers are risk-averse.
- Forget risk when your customers are risk-neutral.
- Force risk when your customers are risk-eager.