Are people more risk averse post-pandemic? Here’s how uncertainty actually affects customer behaviour

Consumers want certainty.

That seems to be the prevailing assumption when it comes to influencing customer behaviour. In times of great uncertainty, so the story goes, people crave stability and become more risk averse.

…Not so fast.

While the likelihood of something happening does affect customer decisions, what decision is made depends on whether the outcome is likely to be positive or negative.

That means it’s not only the certainty of an outcome we have to worry about, it’s whether that outcome is good or bad. If we want to influence a customer to do business with us, we need to adjust our approach accordingly. Here’s how it works.

The certainty continuum

1. Certain the outcome will be positive

   If the outcome of working with you is certain to be positive, your customer will be highly motivated to proceed and be scared of missing out.

   They’ll want to “lock it in”.

   For example, a customer might choose to buy floor tiles from you even though you’re more expensive than a competitor because you can guarantee supply when they need it. You are guaranteeing a positive outcome. Likewise, a tradesperson who turns up on time will likely get more referrals because of their reputation for reliability.

   If this sounds like you, your opportunity is to emphasise why certainty of supply or outcome is important to them. Guarantee policies and statements like “you don’t have to worry about missing out” will help to convince them to go ahead.

2. Certain the outcome will be negative

   If the outcome is certain to be negative, your customer will be looking for ways to avoid or minimise it, making them more open to take risks. They’ll be willing to roll the dice and give things a try.

   Patients who have received a bad prognosis might opt for experimental treatment, for example, or your customers might come to you because no one else is offering a solution to their tricky problem.

   In this situation you will want to emphasise your willingness to try new things, experiment and never shy away from a challenge.

3. Uncertain whether the outcome will be negative

   If there’s more of a chance the outcome will be negative but the situation is uncertain, your customer will likely be looking for ways to protect themselves from the bad thing happening. They’ll be willing to pay for peace of mind.

   The insurance industry is built upon this very notion, where customers want the risk of something bad happening taken away. It happens in banking too, where people keep money in cash-on-call bank accounts rather than lock it away in superannuation because they want to be able to draw on it at any moment.

   Here the opportunity is to focus on allaying their fears and taking worry off their shoulders.

   “We’ll take care of it” and “you have better things to do than worry about this” are sentiments you can try.

4. Uncertain whether the outcome will be positive

   If there’s more of a chance the outcome will be positive, customers will likely proceed as long as it’s not too much effort. They might be in a “take it or leave it” headspace, so your job is to make it easy to bother.

   Motivating people to sign-up to a newsletter is an example of this, where customers will bother as long as it’s easy and they’ll get an immediate reward (like a 10% discount). As soon as the sign-up process becomes invasive or convoluted, they’ll tend to give it a miss.

   If this sounds familiar, make sure you maximise the upside for them while minimising any downside. Lead with the benefits to them (e.g. get 10% off) before what they have to give in return (e.g. their email).