to use loss aversion for email marketing (plus four examples) //

It is becoming more difficult to acquire customers, so it makes sense to market to existing customers more effectively. Psychological approaches can be used in email campaigns to motivate customers to take action, rather than relying on sloppy copy and a “Buy Now” mindset. It’s not easy to know which approach to choose.

This is a tie-in to one of my MarTech columns’ goals in 2023 — sharing strategies, tactics and information that will help you find more opportunities in your email list and use your email marketing resources more efficiently.

One of these approaches is to use psychology to address the motivations of your ecommerce customers. I have built many email campaigns based on Robert Cialdini’s seven principles for persuasion.

• Social proof
• Reciprocity
• Authority
• Like
• Consistency and commitment
• Aversion to loss and scarcity
• Unity

We often talk about social proof ( seeking guidance or assurance from others that our decision is correct), reciprocity obtaining value in return, and authority ( seeking professional advice).

Although loss aversion is a way to avoid losing something important, it doesn’t get nearly as much attention. However, it can be very helpful when used correctly and with the right audience.

Get deeper: 4 cognitive biases, psychological drivers, and behavioral factors that influence behavior

What loss aversion can do for you and customers

When designing email campaigns, we don’t place as much emphasis on loss aversion. We are trained to motivate customers to take action by showing them the benefits — what’s in the for them — and not the costs of not taking action.

How loss aversion can help

This appeals to the basic human need to avoid suffering — in this case, the loss of something valuable. Psychologist Daniel Kahneman found that the pain of losing can be twice as strong as the pleasure from gaining in a psychological study. Avoiding loss can be an effective motivator.

This cognitive bias is shared by many. Sticks are more effective than carrots («Act now before your miss out»).

What loss can loss aversion do?

Talking about loss aversion can help you frame the situation better. You shouldn’t use it to force customers to do something that isn’t in their best interests or to manipulate them.

This will only lead to disgruntled customers who are likely to regret their purchase. It can also affect their brand experience and impact their lifetime value.

Loss aversion is most effective when it’s used to help customers avoid negative outcomes, such as:

• Price rises can lead to higher prices.
• It is possible to lose a valuable feature.
• You are missing out on the products that your customers regularly purchase.

Loss of aversion, urgency, and scarcity

These three concepts are often treated as though they are one and the same. Although they aren’t identical, they can often be used together in email campaigns (as illustrated in the Leesa example).

Urgency is strictly a time-based issue, but there may not necessarily be any loss.

The scarcity of items drives the demand for those that sell quickly or have a limited supply, such as:

• Cheap airfares and cruise cabins
• Limited-edition products.
• Or any other thing that cannot be replaced after it’s gone.

Customers are reminded of the potential loss by losing control when they don’t act quickly. A campaign that focuses on the sale of a subscription or new airfare prices can be more effective than one whose central message states “Our sale ends tonight.”

What are the exact consequences of not taking action? This is a loss-aversion mention.

All that said, is loss avoidance just another fancy name for FOMO (fear or missing out on)? FOMO is not just about the social pressure to know that others will benefit from your purchase or signing up for an event.

Your customers can be encouraged to overcome their fear of losing money by offering them options. For campaigns that focus on loss prevention, see my advice below.

Get deeper: How marketers use cognitive biases

Before you invest, test before you make a decision

This is an important point. You cannot expect your brand to appeal to a single group of customers. It might tilt more toward price-sensitive shoppers rather than impulse buyers or social-proof-seekers. It could also represent all seven principles of persuasion by Cialdini.

To find out what motivates customers to take action, you can set up A/B testing campaigns. You want your customers to not only open and click emails, but also to upgrade, buy from you, or interact with all of the information that you provide.

This type of testing involves more than testing one subject line, or calling to action against another. It is important to adopt a holistic approach that considers all aspects of the inbox view, including the name, subject line and send time, as well as the offer, email copy and images.

Because you are testing the entire campaign, this reduces the need for individual elements to be tested. It is important to ensure that each element supports the persuasion principle being tested, as this will be defined in your hypothesis.

One example hypothesis: Loss-led copy vs. loss aversion

A hypothesis is the foundation of all good testing. It’s your prediction of what your test will reveal. This is one that I used in multiple campaigns to discover the primary motivation of our customers.

• “Loss-aversion copy is more motivating than benefit-led copy because people hate to lose out more than they love benefitting.”

Three ways to avoid loss

Even if your customers are more concerned with avoiding loss than gaining benefits, loss aversion should be used sparingly and under specific conditions. A steady diet of “Don’t miss out/Act immediately or lose” messages will deplete your motivational power.

Customers who are most sensitive to loss anxiety might suspect that you aren’t being completely honest with them when you continue to repeat the “Act now, or lose out” message.

These customers will be more likely to buy from you if they are able to find ways to avoid losing money. This is the message that these three campaigns convey without saying “Don’t Miss Out!”

• Skip the line: Allow them to pre-order popular items or limited quantities.
• Do a test drive before you purchase . Loss-averse individuals don’t want the risk of spending their money on something that can cause pain. Instead of pushing them into buying, assure them that they will spend their money wisely on products.
• Reduce the risk A coupon, discount or rebate can encourage a cautious person take a chance with a potentially dangerous product. This approach should be used conservatively. You can also test it against other loss-aversion tactics like pre-ordering as it can lower your profit margin.

Loss-aversion email examples

1. VIP ordering

Subject line – Don’t Miss Out, Pre-Order The Ariel Bag

What it does right

Customers can place orders on signature brands products before they go on sale. Customers are given a deadline and information about when their order will be processed.

How it could improve

You can add copy to remind customers why this product is so popular or what the “popular demand” was. Was it sold out before? Was it a limited-run edition?

2. Loss + Scarcity + Urgency

Subject line – 2 days until price increases take place

What it does right

This campaign contains everything you need to send a loss-aversion message:

• Loss – Hesitating can lead to higher prices for popular products.
• Scarcity : Customers who are price sensitive may have fewer options for affordable products.
• Urgency The subject line and email copy highlight the price-change deadline.

This bold approach is also evident in the email’s text, which expresses the message without any strong hero messages. The email wraps a clear explanation of the price rise (a sensitive topic given inflation-ridden 2022), in a statement about company values and customer appreciation.

How it could improve

Although the tone and copy are perfect, customers will not be able to read the details if there is no image to grab their attention. Leesa sent me a final reminder about price increases. It contained a brief copy and featured a strong hero photo.

3. Beware of price increases

Subject line Reminder: Sign up today to avoid Ellie price increases

What it does right

This email is classic loss-aversion for subscription services. However, it can also be used for other ecommerce platforms. It reminds customers about the benefits they are receiving now, what they stand to lose if they don’t act and when they must make a decision. It is also obvious why the service is evolving.

How it could improve

Customers may be able to see clearly what they can expect from their subscriptions and what they might lose if they cancel.

4. Loss aversion mixed with scarcity

What it takes to get right

This campaign shows how FOMO and scarcity can be important elements of a loss-aversion strategy. Customers are able to see what others have done and the copy frames the benefits of quick action. It also informs customers about what they can do to get more if they act quickly. The call to action is clear and simple.

How it could improve

If Advent calendars sell as fast as email claims, could you give me a deadline?

Next steps

A loss-aversion campaign, as I said earlier, requires special handling and an understanding of your customer segments in order to be able to determine when it is appropriate to use it.

Customer who isn’t interested in buying new products or doesn’t value price will probably not open an email that focuses on FOMO and avoiding price increases.

Testing is therefore so important. This will allow you to identify the motivations of different segments of your customer base and help you create campaigns that appeal to them. These campaigns can be further personalized by adding personalization data.

You can find more information on setting up an email testing program in my article 7 common issues that prevent A/B/n from succeeding.

These campaigns take time and effort, but the rewards are huge: customers who help build your business because they understand you and have the right words to say.

How to Use Loss Aversion in Email Marketing (plus 4 Examples) was originally published on MarTech.