Loss Aversion In Marketing

The Fear Of Losing Something. 

What Is Loss Aversion?

Loss Aversion can be Indentified as the tendency of people to strongly prefer avoiding losses to acquiring gains.

Research shows that 90% of consumers don't like losing what they've gained. They are more likely to do anything in order to gain it back.

It’s part of human nature to fear losing things we already have, and in psychology, this principle is called Loss Aversion.

In other words, buyers make purchasing decisions that are motivated by their desire to avoid a loss.

This theory not only explains how we do our best to avoid losing something that we already have but also how we take risks to avoid losing something because avoiding losses are more important than the wins. 

Take this as an example:

People are more upset when they lose $700 than they are happy when they find $700.

They prefer avoiding losses.

How To Use The Theory Of Loss Aversion In Marketing.

As a smart marketer, take this as an advantage that can boost conversion rates in your marketing campaigns and this is how you can use this marketing psychology principle the right way.

Launch a "free-trial" of your product or service, make sure it solves a certain problem(s) and provides value for a certain period of given time.

When that time period is up, cancel the "free-trial" and then inform your consumers that they're in position to lose the product unless they upgrade to become paying customers.

This will psychologically trigger the consumer's mind on how to gain the service back and the only way is by upgrading to become a paying customer.

You've seen brands like YouTube use this marketing psychology principle to convert subscribers into paying customers to their online services and products.

And it always works 

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