A couple of short and sharp examples of Loss Aversion from the market place this week, one in which is used to acquire customers and the other to retain.
First we have an example tweeted by BehaviourDesign that showcases how one business makes new customers think very carefully about ignoring their offer. Makes you think twice about skipping by, doesn’t it?
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Figure 1 One time offer (via @BehaviourDesign)
Example two comes from Crazy Domains who are using my fear of losing a domain to encourage me to renew. Red creates urgency, they use capitals to emphasise DEACTIVATED and they spell out the ramifications. Lastly, they niggle me that other people will be able to use it, inferring its popularity.
The downside? This email came to me two months ahead of the renewal date (and was repeated four weeks later), which made the urgency seem false.
Figure 2 CrazyDomains use loss aversion to stimulate renewal
So we can see that loss aversion is a powerful force, but before you rush out to use it in your materials, know that it can backfire on you if not used judiciously. Using fear too much or too often means you will dilute its impact and your customers will become fatigued by the message – just think about those “closing down!” sales where the business is still open five years later. The fear of loss must be realistic and well timed.
Bri Williams runs People Patterns, a consultancy specialising in the application of behavioural economics to everyday business issues.