12 Types of Perceived Risk

John Spacey, updated on April 23, 2017

Perceived risk is a marketing and sales term for customer perceptions of the risks associated with a purchase. Reducing such risk perceptions is considered a fundamental approach to closing sales. The following are common types of perceived risk.

Price

The customer worries if a product is a good price or if a service includes hidden fees. For example, a customer who books a hotel may worry that the hotel charges extra fees. Such concerns can be reduced with upfront fee information such as "all fees, taxes and charges included in price shown."

Terms

The customer worries about the commercial terms associated with a product. Policies such as risk-free purchases with no-questions-asked returns reduce such concerns.

Functions

The customer worries if the product fulfills a need. For example, a customer worries if a refrigerator has enough space for vegetables. Functional risk perceptions can be reduced with ample product information including specifications, examples and instructional content. It is also common to provide a forum or opportunity for customers to ask questions.

Time

A customer worries about the time and effort that will be consumed by a product or service. For example, a team purchasing a new software tool may have concerns that it will make their job more difficult. It is common for products and services to be pitched as convenient and time-saving.

Quality

The customer worries about a quality aspect of a product such as its durability. Techniques to reduce such concerns include warranties, return policies, product certifications and brand reputation.

Usability

The customer worries that a product will be cumbersome to use. Customers may turn to product reviews to judge a product's usability. Usability concerns can be reduced by walking the customer through common tasks with the product. A sales team might do this in person and a marketing team might create instructional content.

Experience

The customer worries if an experience will meet their expectations. For example, a customer worries if a flight on a particular airline will be stressful or if a hotel will feel luxurious and peaceful.

Safety Risks

A customer worries if a product or service is safe. This is handled by building a reputation for safety and addressing specific concerns with information. For example, a toy manufacturer might explain that a product has small parts that are a choking risk but is considered safe for children above a certain age.

Health

A customer worries if a product or service is healthy. This can be reduced with information such as a clean label.

Sustainability

The customer worries about the environmental impact of a purchase. Certifications and information about how things are produced and delivered can reduce such concerns. It is common for a brand to put significant effort into building a reputation for sustainable practices.

Identity & Status

A customer worries if a product or service aligns with their identity or social status. For example, a customer worries if a pair of shorts will look cheap. Brands put significant effort into creating an image and identity that customers embrace. A brand that lacks such status may use strategies such as no-label products.

Service

The customer worries that customer service will be slow or stressful. Service offerings such as self-service tools can reduce such concerns. A salesperson may say things such as "you can call me any time you have a problem" to assuage customer service concerns.