Reducing Risk vs. Building Trust

Carabiner

Building trust? That’s one way to look at it…

But what about risk? Paul Slovic is a founder of risk-perception research, a field started in the early 1970s. Much of Slovic’s research is focused on understanding why people react to risk the way they do. Slovic’s analysis of risk perception shows that if an activity has certain qualities, people increase their perception of risk. Once we understand these risk-increasing qualities, they can be appropriately addressed. For example, several key risk-increasing qualities Slovic identified are:

  • Familiarity — Unfamiliar risks make us worry more.
  • Understanding —  If we don’t understand how something works, our sense of risk goes up.
  • Trust — If the organization involved is not seen as generally trusted, our perceived risk increases.
  • Benefits —  If the benefits of something are not clear to us, we believe it is more risky.
  • Personal Risk — If the risk puts me (personally) in danger, I worry more, risk increases.

The actual list is far longer than this, but let’s look at the above five qualities. Now let’s think about what makes communication impactful. While it’s important that marketing communications are catchy and memorable, it’s also important that they reduce risk. While in many marketing circles we discuss “building trust,” we should consider that “trust” is simply one element the brain uses to evaluate risk.

Instead of asking “How do we build trust?” ask “How do we reduce risk?”

Trust is a popular buzzword, and works great in presentations … as long as no one gives it too much thought. But can you really earn trust in a single communication? From a logo? In a single interaction? Or does trust grow from experience? A tentative relationship that either went well, or did not. Once a relationship is established with a customer, a company has many opportunities to build trust…but can you build trust with a stranger?

Slovic’s risk increasing elements should be seen as barriers to purchase. Risk is a mental roadblock, a red flag that stops us from taking action. However, many organizations have come up with tactics to reduce risk:

  • In-Store Sampling — Studies have shown that in-store sampling not only has dramatic sales impact on the day of the sampling event, but also increases sales of established products and line extensions, as well as new products, for many weeks following. In-store sampling reduces risk by creating familiarity with the product and also makes the benefits of the product clear (via tasting).
  • Free Return Shipping — Zappos has done a great job reducing the perceived risk of buying shoes online by offering free return shipping. Customers don’t need to worry about the shoes not fitting because they can easily return them, thus reducing the risk of the initial purchase.
  • Demos — Ron Popeil revolutionized the infomercial. He created such late-night sales greats such as the Showtime Rotisserie and Veg-O-Matic. Ron’s infomercials open with shots of beautifully prepared food (benefits), then Ron shows exactly how the product works (understanding) and prepares meal after meal to demonstrate the various uses of his products (benefits). One of Ron’s longest running infomercials was 28 minutes long, which may seem excessive, but also established familiarity with the product and with Ron himself.
  • Testimonials — If a business features testimonials on their marketing materials, an element of third party trust is presented. If the business can create a perception that they are generally trusted (by independent third parties) risk to the customer goes down.
  • Driver’s License — In Italy penalty points on your license for traffic violations go backwards, you start with 20 and authorities take them away. Italian officials found that loss aversion is a more powerful influence on people’s behavior than gaining penalty strikes on your record (as they do in Britain). This of course speaks to the personal risk in the form of loss. The perception of loss throws up a red risk flag, motivating citizens to reduce their risk of loss.

When you look at some of the more effective marketing out there, you’ll find elements of risk reduction at play, disguised (sometimes unknowingly) as “trust building.”

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