{"id":10701,"date":"2022-11-29T04:30:33","date_gmt":"2022-11-29T04:30:33","guid":{"rendered":"https:\/\/zenmedia.com\/?p=10701"},"modified":"2023-05-15T06:27:00","modified_gmt":"2023-05-15T06:27:00","slug":"loss-aversion","status":"publish","type":"post","link":"https:\/\/zenmedia.com\/blog\/loss-aversion\/","title":{"rendered":"What is Loss Aversion, and How Can It Strengthen Your B2B Marketing Strategy?"},"content":{"rendered":"\n

Imagine booking a long flight and opting for business class over first class to save spending money. When you arrive at your gate to board, you find out you\u2019ve been unexpectedly upgraded to first class! Now, instead, imagine booking a first-class flight initially. You arrive to board and are told that first class was overbooked for this flight, and you will either need to be demoted to business class or wait for the next flight. Psychology tells us that most people in this situation will be twice as upset over losing something they thought they had versus the feelings of happiness when they gain the same thing. <\/p>\n\n\n\n

This concept is called loss aversion, and it can help strengthen your B2B marketing<\/a> strategy.\u00a0<\/p>\n\n\n\n

What is loss aversion? <\/h2>\n\n\n\n

Loss aversion is the idea that people are twice as likely to be upset over losing something they already \u201cown\u201d than the pleasure they gain from getting something new. To put it in B2B terms, by the end of a trial period of a product, consumers have become accustomed to the solution and have integrated it into their routines. Rather than lose that option, they will be more willing to pay to prevent the loss when their free trial runs out. <\/p>\n\n\n\n

Buyers also want to avoid losing money, so it is up to brands to eliminate that barrier\u2014usually, through free trials. Humans make millions of tiny decisions daily\u2014many we don\u2019t even cognitively think about because our brains have developed to help us reach decisions faster in order to cope with the overwhelming amount of choices. Loss aversion kicks in when we feel we\u2019re going to miss out on something or lose something we already have. <\/p>\n\n\n\n

Everyone reading this article has been affected by loss aversion in some way\u2014and many of you will also be a part of the highest-grossing loss aversion industry. Estimated to hit a value of $7 trillion in 2022<\/a>, the insurance industry is predicated on the idea that people will spend tens of thousands of dollars hoping to never use the insurance service they are paying for. We are so concerned about losing our possessions, home, vehicle, health\u2014that we pay to create a safety net of preservation. <\/p>\n\n\n\n

Loss aversion is built into the fabric of our society, and like other key drivers tied to purchasing decisions, B2B marketers can leverage it to strengthen their marketing tactics<\/a>. Here how.\u00a0<\/p>\n\n\n\n

Loss Aversion Strategies <\/h2>\n\n\n\n

Offer free trials.\u00a0<\/strong><\/h3>\n\n\n\n

Free trials and demos automatically decrease risk from your consumer\u2019s decision-making process while simultaneously setting the prospect up for a loss aversion trigger. <\/p>\n\n\n\n

Marketers see a higher conversion rate<\/a> for opt-out free trials (60%)\u2014where consumers must input billing information and opt-out before the cycle begins to end the trial\u2014versus opt-in (25%)\u2014which only requires an email to sign up and billing information is input before the free trial ends, should the user want to continue the service. But both options can be used to trigger loss aversion. <\/p>\n\n\n\n

There\u2019s no risk of loss with signing up for a free trial, but as that trial nears its end, users enjoying the free trial will be triggered to make a purchase decision. This is when an email or SMS digital campaign<\/a> prompting opt-in users to sign up, or reminding opt-out users that their service will continue unless they opt out, is key to triggering a purchase decision.\u00a0<\/p>\n\n\n\n

Remind buyers what\u2019s at stake.<\/strong><\/h3>\n\n\n\n

Much like consumers need to know what value you bring to the table, they need to know what\u2019s at stake for them\u2014are they missing out on something? Are they potentially losing money? A great way to use personalized data to drive home the stakes for your customers is to show them reports on how much time, money, or resources they will save by using your product or service. <\/p>\n\n\n\n

And if they\u2019re already using your service\u2014free trial or otherwise\u2014using general language like: \u201cWe offer unlimited storage space, exclusive benefits, and customizable metrics. Are you sure you want to cancel?\u201d is very different (and less compelling) from using personalized language like: \u201cSusan, you have 210 GB of stored information, have increased your productivity 5% over the last month, and have access to premium video content. Are you sure you want to cancel?\u201d <\/p>\n\n\n\n

Offer clear-cut incentives.\u00a0<\/strong><\/h3>\n\n\n\n

Incentives like a limited-time offer and personalized value-adds show your B2B buyers<\/a> what they will miss out on by not converting now. If you have gathered valuable data on their team\u2019s performance over the 60-day free trial, remind users that they will lose that data if they don\u2019t subscribe. If you have a special running that will help a prospect save money or give them access to exclusive resources, use these incentives to drive urgency.\u00a0<\/p>\n\n\n\n

\u200bUse the \u201closs pitch\u201d versus the \u201cbenefits pitch.\u201d<\/strong><\/h3>\n\n\n\n

Like the example above, a \u201closs pitch\u201d focuses on highlighting what the user may lose rather than what they could gain. <\/p>\n\n\n\n

A loss pitch for a SaaS company could sound like: <\/p>\n\n\n\n