I’ve been toying with the idea of risk in decision-making for any purchases. After a couple of Twitter exchanges, I realised a lot of thought has been put into risk-based decision making in financial products. But I haven’t heard the concept mentioned much in other situations.
When I say toying with the idea, it’s because I’ve been thinking about it and have done zero research because I would, then, run the risk (he he) of finding out that smarter people than me have already figured this whole thing out. But I’m currently working on two incredibly different industries, one that I would call low-involvement purchases and the other high-involvement purchases, and that got me thinking about adding risk as a secondary attribute to how one plans out consumer journeys.
The core theory here for me is that any decision is a risk in itself and, as we know from Nick Chater’s book “The Mind is Flat”, people hate having to be shown off as having made wrong or unfounded decisions. Which is why, quite often, we post-rationalise why we have gone for one product vs the other. By doing that, we effectively reduce the risk of being proved wrong in our decision making.
This got me thinking about whether the categorisation of low and high involvement purchases holds in all contexts.
In theory, stuff we don’t have to think to much about or we wouldn’t get too many questions about when purchasing gets ranked as low-involvement. Think of basic foods, clothing or house cleaning. This stuff effectively poses no risk to one’s “face” or budget and, therefore, the decision-making process is less intricate and the journey to purchase shorter. It would then follow that marketing these types of items to audiences for whom they are low-risk would be quite easy, a simple matter of just refreshing awareness and not …well, messing up too much in the ads.
There are, obviously, things which are inherently high risk. Less so because of the risk of “losing face” but primarily because they pose a huge threat to one’s finances. The obvious items are cars and houses. Unless you’re a billionaire, buying a house on a whim, with no research is not even possible, let alone a justifiable decision. So in these cases, the decision making journey expands to months and to hundreds of steps, because every step is aimed at reducing risk. You try to find as much information about your purchase to insure yourself against error.
And there are, interestingly, items where the risk is not associated necessarily to the cost of the thing but to the “identity-impact” it has. Why did you decide to switch from iPhone to Pixel? Are you now wearing Vejas? Why? How come you work on a PC? This category of products that come with in-built identity-driving attributes also comes with a huge risk load when deciding to purchase. Which is why marketing for these items usually takes the form of “status reinforcement ” for lack of a better term (I’m sure the better term is very obvious ;). The risk in-built into the decision is less about losing money on a faulty item and more about losing “face”.
Of course, one could argue that cost/price is the element which adds most risk therefore that should be the only axis of categorisation. Because people who choose to buy something to hedge a “face losing” risk are silly. And the only thing I can say to that is I still have to explain myself to my friends when I put my Pixel on the table amongst a sea of iPhones :)
So, we could agree there are potentially two main axes of risk: cost and status. But here where it gets even more interesting. The reality is there are many other smaller axes. Consider the simple example of a range of pastas (yes, the Italian wheat thing you eat with sauce). They are a relatively low-risk purchase, nobody would research them on a daily basis EXCEPT if you were gluten intolerant where suddenly risk turns up and the marketing journey becomes more complicated. The same is valid if we’re speaking to people who really like pasta and see themselves as connoisseurs. They would research pasta and the marketing journey would need to deliver extra for them [as an aside, this is not a random example, below you can see a delivery service for fancy pasta. I’m not saying they’ve done a proper segmentation but if they think there’s a market, the risk attribute “don’t wanna buy shitty pasta” holds]
This may mean that in most categories there are inherent, yet different, risk factors that should be considered when building journeys to drive to purchase.
So when in building journeys, one could consider the level and type of risk associated with specific sub-groups of their addressable audience and build journeys accordingly.
Example: I am a company that sells home cleaning products. Mostly organic. Safe for all family members and pets. Quite good, reasonably priced.
No-risk addressable audience: everybody who cleans. Journey — basic, driven by mental & physical availability.
Risk factor 1: families with babies and toddlers (because they crawl)
Risk factor 2: people with pets
Risk factor 3: people with allergies
Risk factor 4: ….
For all of the above, the primary journey is different. Okay, the family with babies group is a temporary risk-factor group but one that will never reduce in volume (unless people stop having babies or have them fully grown). Risk-sensitive journeys would have to include different messaging, different distribution options, different packaging (potentially) and definitely more and different content online, because what you are fundamentally trying to do, after the initial stage of awareness building, is hedge your audiences’ risks through comms.
Not sure if any of this can be applicable as is but I’m sure it might be a useful way to subsegment core audiences and originate different journeys. As usual, I only half think through all my stuff in here …
Opinions and builds are always welcome!