No one likes to lose, whether it is a game, argument, running a business, or even wanting to buy a product. In fact, it has been observed that when people decide to buy something, they are keen to avoid taking a loss. Since this is a well-known fact, most marketers employ loss aversion marketing tactics.
Understanding Loss Aversion
Loss aversion primarily means that people do not want to lose anything in order to get gains. Researchers have found loss aversion is a potent psychological instigator among those who want to acquire something. Behavioral psychologists have found that loss and suffering a disadvantage has a bigger effect on people’s choices and decision-making compared to gains and advantages.
If a person assumes that they will suffer a loss, it will evoke a strong reaction in them and that, in turn, affects their buying behavior. Marketers understand this and use it to increase sales and profits.
Here are five of the most commonly used loss aversion marketing tactics that can help small business owners not only retain customers but also significantly increase sales.
Why do limited-time sales see a spike? That is because they create a sense of urgency among buyers. They feel that if they do not buy during the sale, they will lose out on the discounted price. Hence, they rush to the sale to benefit from the discounted prices.
It is best to ensure that people figure out that there are a limited number of products available for a limited period. That will spur them to rush and complete the purchase so that they do not miss the wonderful deals that you have to offer.
Loss aversion does not always lead to purchase. If prospective buyers do not see value in buying the product, they will run away and refrain from purchasing it. Hence, it is important to provide a stellar customer experience. This will ensure that they do not find a reason to leave without finalizing the purchase.
You can enhance customer experience by offering them a feature-filled product, a seamless buying experience, and outstanding customer service. This will keep your customers loyal and ensure they continue to fraternize with your business.
As a part of your loss aversion marketing strategy, create a loyalty program. That will incentivize customers to keep purchasing from you as the loyalty points will provide the value they are seeking.
Loyalty points should allow your customers to get discounts or gifts. When that happens, it will be harder for them to leave you as they will lose the points and hence, the discount or gifts that await them.
One of the biggest turns off for customers is poor customer service. Even if they perceive a loss by not buying your product, they will not mind it if you do not offer a high level of service. Ensure you address customer queries and concerns.
Resolving customer problems to their satisfaction as quickly as possible is the way to win their hearts and provide value to your service. This is one of the most popular loss aversion marketing tactics that you can utilize to offer value to your existing and potential customers.
When people own something, they place more value on it as they do not want to lose it. You can do this by providing free trials or samples that allow your target audience to interact with your product or service. When your audience uses the product or service, it will create a sense of ownership.
Make sure that the samples provide the entire experience you want them to have. Remember, the key is to provide value to your audience and that will help them engage with your brand and create brand awareness.
Loss aversion marketing is a great tool to have in your marketing strategy arsenal. It is highly effective and can provide the results you anticipate. However, make sure that you do not overuse the urgency aspect of it. Otherwise, your customers will get bored. Use it for special occasions but the remaining tactics can be used every time and anytime.