Which is better: keeping $5 or gaining $5 more? According to the theory of loss aversion, most people prefer the first choice. We would rather avoid losses than pursue gains.
This is the psychological phenomenon behind many familiar marketing strategies. Free trials, expiration dates, and limited supplies are some of the most common loss aversion techniques, but there are many more. This post will examine some of the most common marketing strategies that take advantage of this psychological trigger.
Free trials allow a potential client to get used to a product while they test it out. Once that trial ends, most people would rather pay for the full version, rather than risk missing out on keeping the product.
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Deadlines can trigger an emotional response and create a sense of urgency in potential clients. When a person has only a short amount of time to take advantage of an offer, such as a coupon or a weekend sale, often they would rather spend money than risk missing an exclusive offer.
Just like with expiration dates, potential clients don’t want to miss a good opportunity. Online retailers may say “Supplies are limited” or they may specify a certain number that remain in stock. Shoppers are more likely to buy if they think the product will not be available for long.
When given the choice, most buyers would rather get the 10th product free than buy 9 products for 10% less. That is what makes reward programs, such as getting the 10th coffee for free or 10 cents off a gallon of gas, so popular and effective.
Shopping cart reminders
Many e-commerce sites send customers automatic reminders if they added items to their shopping cart without making a final purchase. Besides giving them a little nudge towards a sale, it can also trigger a sense of urgency if the cart expires after a certain amount of time.
To find out which of these strategies is best for your organization, contact CC&A Strategic Media.