Hey 👋 The Crew here.
By the time this newsletter was written, Google Search Console hadn’t updated search performance for almost 100 hours due to a “bug.”
So the next time you feel like things aren’t going smoothly, just remember that even Google struggles to fix essential stuff from time to time.
Now let’s get back to business…
Reading time: 4 minutes, 20 seconds
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Loss Aversion
A person stands in front of you, casually tossing a coin up and down.
They say, “I’m going to toss this coin. If it’s tails, you lose $10.”
Then they propose a wager: “How much would you have to gain upon winning for this gamble to be acceptable to you?”
That’s the question Daniel Kahneman and Amos Tversky asked students.
The most common response they got? “$20.”
Here’s why: Our losses can feel twice as painful psychologically than gains.
In other words, we value what we lose at least two times more than what we gain.
This theory has been backed by numerous studies ever since. And it was confirmed once again in 2020.
You can also see it in real life:
- Penalties impact our decisions more than rewards, according to studies.
- Employees often avoid asking for a raise because they’re afraid of being turned down.
- People stay in their “comfort zone” instead of pursuing new experiences.
…And so on. You can probably think of a thousand other examples.
Not surprisingly, loss aversion is a technique that is highly exploited in marketing. Let’s check it out.
Three ways you can leverage Loss Aversion
1) Remind your customers what they’re losing
Whenever you try to cancel a service, abandon a cart, or unsubscribe from an email list—you get hit by instant FOMO notifications.
Chargebee does this well with their retention cards:
If you were to unsubscribe from this newsletter, we might remind you about the valuable knowledge in marketing psychology you’re giving up on—and the risk that has for your campaigns.
See what we did there?
2) More important than price? Savings
How do you stop losing money and other valuable items? By saving them, of course.
That’s why companies will often put the actual price somewhere in the background and emphasize the savings.
Check it out:
See how this store uses the left-to-right reading pattern so you see how much you’ve saved before you see the cost?
That’s a textbook example of loss aversion.
SaaS brands often put the savings directly on the pricing page when upselling you on a better tier—you’re always saving more money, more time, etc.
So remember—discounts and savings before prices and gains.
3) Put more loss in your messaging
Seriously.
Whatever you’re offering, focus on the things your customers will lose instead of what they’ll gain to push them towards purchase.
Sound familiar? That’s because all urgency, FOMO ads, and other messaging are loss-averse at their core.
Check it out:
Here, Tuborg is banking on you missing out on a vibrant experience.
Because if you don’t buy this beverage, you’ll lose a chance to feel happier. It’s a trick. But it works.
All the “don’t miss out,” and “last call” ads have the same purpose. And this is even more prominent in the health industry:
Gaining more life? Eh… OK. Losing existing life? Yikes.
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MUST-KNOW B2B BENCHMARKS: So it’s been weeks and you still haven’t closed that B2B deal. No worries—the average journey typically takes six months. Dreamdata’s report shares insights like this and more based on 414 B2B companies they analyzed. Download the free report now.*
NATIVE ADVERTISING: How much does native advertising cost? Is it worth a test? Tough question, because trying to find fresh native ads data is like trying to stop swiping Reels. But this looks into recent native ads numbers—and might provide some new insights. Take a look.
SEO: Believe it or not, more than 60% of all Google searches either finish on the results page, or drive traffic to their own properties—such as YouTube, Google Flights, Google Hotels, etc. Tough business for the little guy.
PRIVACY: No cookies, no cash. Google’s Privacy Sandbox will make advertising super difficult and reports say that removing cookies today would cause a 60% drop in revenue for all advertisers. Big ouch.
META: Bring out the cake—Threads is celebrating its first birthday. For the occasion, the platform surveyed its users to find out how they’re using the platform— 65% say they’re using the voice notes feature, 60% for socializing, while 59% look for food-related content. Interesting.
*This is a sponsored post.
ICYMI, last time we looked at Inattentional blindness.
The “Loss averse” Crew
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