Do people feel the fear of loss more strongly than the reward of gain, and should our marketing reflect that?
The idea of using Loss Aversion in marketing is worth thinking about.
We very often lean on incentives or gains to persuade or ‘sell’ our members on an idea, product, or service.
What if this is backwards?
In psychology, Loss Aversion means that the fear or reality of losing something, usually time or money, has a greater mental impact than gaining something of equal value.
A quick example to understand:
When we offer a $200 bonus, that is framed as a gain. The opposite approach would lean into Loss Aversion by focusing on what someone could be or already is losing by not acting.
From a psychological perspective, the reward tied to a gain is often weaker than the potential or perceived impact of a loss. Even when someone is gaining $200, they are also giving up time, effort, and attention to act. In many studies, that perceived loss outweighs the gain.
As a general rule of thumb, people tend to feel the impact of a loss about twice as strongly as the positive feeling from an equal gain.
Should we use this? How do we use this?