A Powerful Psychological Trigger...

[Richard N Adams]

I'm currently reading Nudge by Thaler and Sunstein and it's a truly fascinating read that explains some of the things that control our decision making - perfect advice for internet marketers.

One thing that really struck me in the book recently was a study where some scientists divided up a class into pairs. One of each pair was given a product and sold to sell it to the other person. The other person of course was told to buy it. All they had to do was to agree on a price.

Interestingly they found that the person trying to sell their product generally thought it was worth twice what the person trying to buy it thought it was worth. They surmised that the value of losing something is roughly twice the power of gaining something.

And we as internet marketers are generally trying to sell things (gain). I'm just thinking aloud here about how we could use this strategy of perceived value to make more money.

I suppose shareware applications could be one example. Or $1 entry into a membership site. But do you think this would work, for example, for an ebook?

Imagine if you set up payment in such a way that they had a limited number of pages or time customers could read the ebook for and then it locks down unless they buy it. The study would suggest you might be able to charge more for it that way.

Mmm, just thinking aloud here. Anyone else come up with ways to use the power of "loss" instead of "gain" in our marketing?

All the best,
Richard

[Adam Curry]

Nice piece of info there. So basically if you want to be a successful Internet Marketer, study psychology.

[megaresp]

Originally Posted by Richard N Adams

...set up payment in such a way that they had a limited number of pages or time customers could read the ebook for and then it locks down unless they buy it.

What you're describing here is essentially the puppy dog close. Let somebody play with the item for a week or so, then take it back unless they buy it.

The approach can only work if the item is truly useful. I remember reading about a salesman who sold jets to CEOs. He'd given them a loaner for a month. Of course, they quickly grew accustomed to the convenience of having a jet at their disposal, and spent the last 2 weeks of the month figuring out how to persuade their board the item was essential.

In terms of your membership site idea, it definitely could work if...

• You make it free on entry
• You have some way to guarantee everyone who joins actually starts using the service. You will have to think hard about this one...it's an enormously difficult challenge
• There is genuine 'can't live without it' value in the service offered

You do that, and the approach will work. What's more, you'll be able to charge a whole lot more than the usual cut-rate barely-making-money subscriptions that such services are usually sold for (assuming there is genuine value).

If you succeed, come back here and brag about it. I'd certainly love to hear about it.

[Nick Brighton]

Originally Posted by Richard N Adams

Anyone else come up with ways to use the power of "loss" instead of "gain" in our marketing?

Hi Richard,

Great point, and very important one too.

Truth be told - this psychological trigger has been in use on sales pages for many years. Although not quite as you described it, the same principle is there:

"Buy now or lose out on these bonuses"
"Hurry, sale ends tonight"
"Act now, before your problem gets 10x worse"
"The sooner you act, the less money you'll be losing"
"Save your "X" today using this guide, before it's too late"

There's endless ways this is being used, but those are typical examples of how people use the fear of loss to increase conversions.

[Richard N Adams]

Hi Nick,

I agree that the "But now or lose out on these bonuses" type of marketing has been used for years but my suspicion (sp?) is that the effect would be even more powerful if you had the said item on your hand/on your PC and *then* you lost it rather than it only being *available* to you. Does that make sense?

Talking of the puppy dog close, I think it would be more powerful to give someone a puppy for a week then say they need to pay up or you'll take it away, in comparison to telling someone you only have a few puppies left so they should buy now.

Agree/disagree?

All the best,
Richard

[Nick Brighton]

Originally Posted by Richard N Adams

Hi Nick,

I agree that the "But now or lose out on these bonuses" type of marketing has been used for years but my suspicion (sp?) is that the effect would be even more powerful if you had the said item on your hand/on your PC and *then* you lost it rather than it only being *available* to you. Does that make sense?

Talking of the puppy dog close, I think it would be more powerful to give someone a puppy for a week then say they need to pay up or you'll take it away, in comparison to telling someone you only have a few puppies left so they should buy now.

Agree/disagree?

All the best,
Richard

Ahh I see, yes. It's the same psychology but used differently. The fear of loss is still there of course.

Well, I'd say so. Major cosmetic companies send free perfume to people through magazines and the post and I'd imagine that they wear it, get told they smell great and then think "I've gotta get some of that".

I think in the context of eBooks, the best thing to do is give away a free chapter.

Frame it as a trial...

Say "Download the eBook today" and the reader could download the first few chapters. Then at the end of the 3 rd chapter for example, you could have a killer cliffhanger which literally forces them to buy the full version.

Imagine renting a great movie and it stops 20 mins before the end. You simply wouldn't let it lie - you'd be back to the rental shop asap to get another copy and see how the the story ends.

That's roaming into a different area of persuasion....curiosity. But when you use a take away or "teaser" as bait, the curiosity is a natrual part of the desire to want the complete end product anyway.

So in summary, I agree - give away some nibbles to water the mouth, then offer the steak when they know how good the chef's food tastes.

(If the bread tastes so damn good, can you imagine what the steak is going to taste like?)

[Intrepreneur]

If you really, want to play with this and to do i effectively, it's all very possible, through using covert influence/ hypnosis...

I love the whole sicence of it, and like to say I'm quite good with it, when in contact with my subject, just don't think it would be as easy for me to transfer this ability into writing.

In saying that I'm no master, of covert influence, but if I put my mind to it, I can play with that idea, quite easily.

[Ewan Cormack]

I think this is pretty much the basis for "free trials" of software. There's already a money back guarantee if the software doesn't work, so why do we need to test it ourselves?

Because once you get used to it, you don't want to lose it...

[CopyMonster]

Originally Posted by Richard N Adams

Imagine if you set up payment in such a way that they had a limited number of pages or time customers could read the ebook for and then it locks down unless they buy it. The study would suggest you might be able to charge more for it that way.

Mmm, just thinking aloud here. Anyone else come up with ways to use the power of "loss" instead of "gain" in our marketing?

All the best,
Richard

I've seen it done before Richard - offering the first part of an ebook for free and then locking up the rest of the book so that the reader has to pay to see the rest. The trick lies in making the content good enough for the prospect to want to pay for the rest of the book.

When it comes down to it - motivations are all about pain/loss or pleasure/gain in some shape or form. Loss is levered in several ways in product marketing - sales piece/pitch (agitating the pain), potential loss in the form of the value build (pile on value which they stand to miss out on) and the offer via scarcity (limited time offers/pricing). These all work on loss.

Slightly divergent from your original point but here's a quote by the authors from Amazon's editorial section "We show that by carefully designing the choice architecture, we can make dramatic improvements in the decisions people make, without forcing anyone to do anything."

While I can see the benefits in doing this, haven't many socialist states tried this?

In addition, there are significant disincentives for entrenched companies/industries to participate. What would fast food, confectionary, alcohol, diet industries do if everyone made "better" decisions? I suppose production resources would be redistributed to more "valuable" enterprises. But industries that survive off poor choices won't go away easily and the die-hard chocoholics, bar flies, junk food purists will still go for their fix if it's around the corner instead of on main street. Just a thought.

[Aaron Sustar]

Yes, the fear of loss is a much more powerful feeling than the joy of getting something new. Let me present this fact to you on a competely not-internet-related example:

In some European countries the traffic lights would go from GREEN to BLINKING GREEN to YELLOW to RED. A large number of studies found out that the "blinking green" told the drivers they were going to LOSE their green light, so a large percentage of drivers actually sped up, insteda of preparing for the yellow light (and stopping the car).

So, yes, fear of loss is a powerful emotion - and in Europe they stopped using blinking green lights because of that.

[Richard N Adams]

Aaron,

Fascinating stuff!

All the best,
Richard