We're inherently fearful of the unknown, even if the options presented are better for us. Here's a powerful Cheat Sheet of 8 Nuggets for overcoming Risk Aversion.
There's nothing worse than feeling that our future is out of our hands, so our desire to have even some control over it weighs heavily.
For instance, imagine Spotify were launching a new version of their app, with a new look and feel and different features.
Switching users over to this new version without warning and, more importantly, without the ability to go back to the old version is something likely to create a lot of aversion, even if it were categorically better.
However, adding in a toggle to switch back to the old (worse!) version, even if for a few months, will provide comfort for little cost whilst familiarity is made with the new app.
Remember that even a small amount of control is valued, and you are still in control of what controls you provide to others.
For customers particularly averse to risk, the collective decisions of others to choose a particular product or service offers a helpful reassurance that it's not as risky a choice as they might've thought.
Using Social Proof to highlight an option's popularity makes it seem more normal and therefore safer. This may be done by highlighting that the option is "our most popular choice".
Going further, you may wish to quantify the Social Proof, stating just how many people bought or, if numbers are absolutely low, what proportion of customers were happy with their decision.
Social Proof is more persuasive when the group is more similar to us. Therefore, you may also want to fine-tune and surface the particular characteristics of the social group mentioned. E.g. Instead of saying "90% of runners liked this shoe", saying "90% of other trail runners liked this shoe".
Whether we like it or not, figures of authority in society play a big role in how we make decisions. What might otherwise appear like a risky choice is immediately seen as a safe, attractive option if made by a person of influence.
E.g A fashion influencer promoting an as-yet-unknown line of make-up to her followers can fast-track the brand-trust creation process. The influencer's existing brand shines a warm halo on the product range, perhaps unfairly so in extreme cases.
Nevertheless, whereas with Social Proof, where the collective actions of others influence our own, Authority relies on the oversized decision weight of a single, powerful person.
Both can be used together to reassure and reduce Risk Aversion.
By its very nature, the future is inherently uncertain. And for humans, we're evolutionarily-disposed to avoid uncertainty, given all the risks posed to our survival.
The other side of this is that any attempts you make to reduce uncertainty will also reduce the riskiness of choices.
Certainty can come in many forms, but is particularly effective around assurances of either future outcome or time.
For future outcomes, knowing that if I buy the product and don't like it or it doesn't do what I'd intended, I can, at the very least, get my money back. This is a form of certainty that reduces Risk Aversion.
For time, we respond particularly well to certain assurances that guarantee a given window within which something can be tested out, will be delivered, or continues to function properly.
If tomorrow is inherently full of risk, any form of certainty you provide today will help people make a decision now.
Though the luxury of choice is an inherent expectation of modern consumption, we often forget how, taken too far, excessive choice can reduce confidence and heighten Risk Aversion.
Consider the pizza restaurant with 1000 possible options. As a new customer, it's hard for me to make an informed, confident decision, because there are so many potentials to make the wrong decision, and I have little knowledge of what appears to be the right one.
I close the menu having made my choice, but the opportunity for "choice regret" is high. I risk having a poor meal, which doesn't feel good.
Consider instead the menu with 6 options, "hand-picked by our chef". Suddenly, I feel able to compare, consider all options and opt for one, safe in the knowledge that they've been confidently, carefully selected for me.
Note also the use of Limited Choice and Authority here.
It stands to reason that reducing choice can also reduce Risk Aversion, especially for new customers.
"Sorry, you've lost me."
As soon as we hear words we don't understand, a lack of familiarity creeps in. Too much unfamiliarity leads to concepts or ideas feeling more risky or unsafe.
If what we're asking people to decide upon is hard to understand, we're facing an uphill battle of persuasion.
Instead, to prevent this, it pays to make your messaging achingly-simple to understand. Remove confusing, long, clever words. Strip down your long sentences into short ones. Use metaphors or existing concepts that people already understand to explain new ones.
Your words should be doing all the hard work, not their brains. Better to do the hard work and fine-tune your words once than have people each get confused and uncertain time and time again.
Don't forget that in an age where attention is at a premium, you've got even less time to get people to understand than ever before.
However, done well, a short sharp message is both memorable and repeatable by the reader to others on your behalf.
Giving people a low-risk taster is a great way to test out the new without fear and regret.
It's a great, tried-and-tested way to build familiarity and trust that needn't cost the earth.
Instead of asking for a commitment to join your co-working space, create a simple Foot-In-The-Door to let them come for free for a day. Going further, get them to bring a friend.
It pays to be generous.
Note that any Risk Aversion may not be to do with money spent, but instead the time required to test your product. Maybe a free day-long training is simply too much time. How about a 30-minute taster instead?
When we don’t know what to choose, we look for guidance. Defaults offer a great, low-cost way to navigate the new and avert feelings of risky, wrong choices.
If I were to go into a fast food restaurant that I didn't know, I might feel unclear about what the right options were for me. However, a clear Default choice (E.g. all out burgers come with chips as standard) removes that decision from my plate, as it were. It also implies something helpful about the brand's character and how you should consume it.
Be reminded that though Defaults are a powerful way to help reduce Risk Aversion in times of uncertainty, they can also be misused. Don't force people into more expensive Default options or choices that wouldn't feel natural for the average consumer.
However, do consider combining Defaults with Social Proof and Authority, explaining the popularity behind the default choice.
Also consider that if you are finding it hard to reduce the number of choices presented to people, Defaults offer a helpful path through.