In an experiment, one group of people was reminded of how having insurance can protect their wealth in an accident.
Another group were primed to think about paying for insurance and never needing it.
No real money was lost or saved.
Yet the just thought of losing their hard-earned cash convinced the first group that they needed insurance and the other that it was a scam.
It doesn’t even have to be YOUR money.
A different study found that salespeople who feared rejection, harsh criticism, or losing reputation became less creative and more risk-averse.
Furthermore, it doesn’t even have to happen to YOU.
Often hearing (or reading) about how someone else regretted a poor decision is enough to make you more risk-averse.
Here’s your Big Consumer Insight for this week:
We want to have nice things but not as much as we want to avoid risking our peace of mind today or in the future.
Thankfully, risk aversion can be reduced by showcasing one option as less risky than all others.
McKinsey does this by celebrating its clients.
Management consultants are expensive, and the projects can be risky.
And you don’t want to be the executive who burned cash on hiring fancy consultants for nothing.
By showcasing the success of their clients and projects in countless blogs, articles, podcasts, and books, McKinsey creates social proof that their consultants have done it all before successfully.