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Perceived Risk

The theory of perceived risk and how it relates to the customer acquisition process is very important in all marketing, but has special implications with direct response marketing.

In simplest terms, perceived risk is uncertainty multiplied by consequences. Uncertainty has these components:

Financial: Will it be worth the money? Is it a good value?

Product: Is it a quality product? Is it reliable, easy to use?

Buying Situation: Do I trust the company to actually fulfill my order and do so promptly? Do I feel comfortable buying something sight unseen?

Psycho/Social: Will others think I’m a nut to buy something like this? Will people judge my purchase negatively?

Consequences include:

Importance of Buying Goals: How disappointed will I be if I don’t like it?

Amount of the Investment: It’s a lot of money for me.

Seriousness of the Consequences: I wouldn’t be buying this if I didn’t need it so I will be very disappointed if it doesn’t help.

As marketers, it is our responsibility to systematically reduce each aspect of perceived risk as they are all barriers to purchase and trial. Creative, media, offers, guarantees, testimonials, sales materials, scientific studies, etc. all need to be developed and evaluated in terms of how they reduce perceived risk.

Perceived risk is also an insightful way to get inside the prospective buyer’s head and to understand the journey the customer must take to get from awareness to purchase. That means understanding and dealing with all the overt and covert buying objections every step of the way.

Perceived risk helps us develop strategies to make people feel more comfortable trusting us and our proposition. Understanding their perceived risk helps us break down the barriers to purchase. My goal with this essay, the other essays, the case studies, references and testimonials is to reduce your perceived risk in working with me.


MAK Direct
MAK Direct