Don’t Miss! How to Win with Loss Aversion in Your Next Marketing Campaign
This isn’t the first time we visit ‘Loss Aversion’ in our blog. Last month we talked about how leveraging behavioral economics can be very effective for influencing decision making. Among the principles of this theory – is ‘Loss Aversion.’
The idea is that people would rather avoid a loss than gain a reward. For example, if someone came over and told you that she’s about to toss a coin. If you bet heads – you’ll win $200. If you bet tails – you have to give her $100. Would you take that bet? Most people wouldn’t. That’s what loss aversion is all about, i.e. people would rather take action to avoid losing something they already have than to gain something they don’t.
So what does this mean for marketing? And specifically, for marketing campaigns? How can we leverage loss aversion for a successful engagement and conversion endeavor? If we can work the messages of loss aversion that prompt action into our content marketing, we can be very successful with maintaining customers and/or expanding their business with us.
Let's see how this works out with a customer segment that’s onboarded with a freemium SaaS product or B2B app (for example).
For example, once the customer has onboarded we can launch a nurture campaign with a series of email communications that will impact emotionally and resonate psychologically:
Create A Sense Of Ownership
Put The Spotlight On What Will Be Lost If There Is Inaction
Let’s take a closer look.
Create a Sense of Ownership
It might be a bit of overstating the obvious, but – you can’t be afraid to lose something that’s yours if you don’t feel that it is yours. So how do we create that sense of ownership? This is where the freemium comes into play.
That is, you can offer your typically paid-for subscription or app for free – for use with the basic features. However, you provide exclusive access (emphasizing exclusivity is also a great tactic – who doesn’t want to be special?) to your premium features . . . for a limited time. Hence, the freemium.
During this trial period – engage with your onboarded base through emails that both provide thought leading, value added content and marketing assets – with how to’s, critical trends, and insights from industry leaders/analysts. But also, woven into these communications are highlights of the benefits of using these premium features, e.g. decreasing costs by X%, improving sales closing rates by Y%, and so on.
When users feel the value, and can quantify the difference between how life was before they started using your product, and how much better life is now – only then will they feel: “This is mine. I want this. I won’t give this up.”
Spotlight on Loss
Once we’re nearing the end of the trial period – we save our last couple of emails for (gently and elegantly) rousing up the fear factor.
That is, instead of incentivizing them to “Buy now and receive one extra” (e.g. a month or user licenses) – invite them to “Don’t miss the opportunity to receive one extra.”
It might seem like semantics – but it’s all the difference between gain and loss.
Furthermore, it is important to emphasize the consequences of inaction. That is, if you don’t act to upgrade or extend, for example, then you won’t be able to continue decreasing costs by X% nor improving sales closing rates by Y%. Weave that into your email’s contents.
Loss aversion can be a powerful psychological principle that motivates people to act. However, as always – this is only one leg of the successful campaign triad. That is, A/B test, analyze results, and optimize.
Don’t miss on your opportunity to win with losing, get in touch and let’s do great marketing together>>