You land on the sales page of a product that you know you need. You glance at the FAQs and testimonials and are satisfied with the customer reviews. You proceed to checkout but hesitate when the final cost (including shipping & tax) is calculated.
After a few seconds of pondering, cursor hovering over “Confirm Purchase”, you close the window and walk away.
Sound familiar? And if it happens to you, I can guarantee it’s happening to your prospective customers. What the heck is going on?
In today’s edition of Why We Buy, we’re taking a look at Loss Aversion – why it’s 2X more painful to lose a dollar than gain a dollar.
Oh, and before I forget, I wanted to give you a sneak peek at something new we’re working on. I’ll share all the details with you next week. That said, there are only 5 spots available…
So to avoid missing out *cue loss aversion alert* here’s the link so you can check it out and apply before we publicly announce it.
Alright, let’s get into why Loss Aversion is keeping your customers from hitting that “Confirm Purchase” button.
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Inside Your Buyer’s Mind 🧐
Humans have a cognitive bias to prefer not losing over gaining something new.
Simply put, humans prefer to not lose $100, than to find $100.
The Psychology of Loss Aversion 🧠
As your buyer assesses your offer, their mind is hard at work piecing together what’s at stake.
Even if your product is 100% guaranteed to give your customer the outcome they desire, the power of loss aversion might keep them from making a rational decision.
Insurance, for example, is a $1.3 Trillion industry in the USA alone. The entire value proposition of insurance is to ensure that you don’t lose what you already have. Customers will pay tens of thousands of dollars on insurance over a lifetime with the hope that they never need to use it.
As I said, people hate the idea of missing out.
This is why it’s up to you to eliminate any perception of losing money (even if it means giving your product away for free… for a little while).
Here’s an example of how the DTC mattress company Endy turns the fear of buying a mattress online into an opportunity to de-risk the whole experience.
How To Apply This 🤑
Alright, so how can we apply this right now to sell more.
Make their decision reversible
Offering money-back guarantees will take the pressure off your buyer. If they know that they can get their money back if things don’t work out, they’ll be more willing to give your product a try in the first place.
Help frame the worst possible outcome
Even the most analytical and rational people will still be influenced by loss aversion. By re-framing the downside, you can remind your buyer what’s really at stake (and remind them of the upside).
Let your customer test-drive
Free trials and demos are a terrific way to de-risk the decision for your customer. They’re also an especially effective way of getting them to become reliant on your solution, making the switch back to the status quo that much harder.
The Short of It 💥
Offer trials, refunds, and demos so that your customer feels there is no way for them to lose. Ensure that the downsides are eliminated and the upsides are continually enforced. When possible, make all decisions reversible (especially ones involving $).
Wanna really get inside your buyer’s head?
There are a few ways I can help:
- Get explosive clarity about what works with buyers by learning how to conduct 1:1 Clarity Calls (2000+ happy students)
- *NEW* Learn how to mine online reviews from real buyers to generate ideas and copy that converts (250+ happy students)
- Book a 1:1 strategy call with Katelyn and get the answers you need to get unstuck and move forward with confidence