Applying Loss Aversion Bias to Enhance Customer Experience
- Posted on July 21, 2022 by Robert
- Reading time about 5 minutes
Amongst the tons of marketing tactics to be considered, implementing loss aversion bias is an excellent option to enhance customer experience. When we’re talking about starting out a successful marketing campaign, as a business it’s important to know what your customers want. Every customer, every single day makes choices and they have certain parameters to decide where to switch next.
While data analysis, business intelligence, and all the technical aspects accompanying your marketing strategy could surely help you out at this point of time, but a major point here is to study the behavioral pattern. It tells a lot about them and can be an extremely helpful aspect in building better customer relationships. Applying a psychological concept here, what exactly are the aspects driving human motivation? Ever heard about FOMO? It’s the fear of missing out and that’s what is leading the millennial generation.
“Successful marketing isn’t just about telling people what they might gain. It is also about understanding what people might fear losing by making the choices you need them to make. This is important because losses have a bigger behavioral effect than gains.”
Businesses today are investing a lot of time and huge money in understanding human behavior better and how the other aspects they follow including organizational politics, design, rewards, etc. influence their purchasing decisions and help in selecting brands in the future. It’s the time we apply loss aversion bias to the customer purchasing behavior and enhance the marketing strategies as well. Quite confusing, is it? Let’s break down what exactly is meant by loss aversion bias, how is it applied, is it any different from customer loyalty software, and finally, how is it a fruitful strategy in business?
Understanding Loss Aversion Bias
Between a lot many marketing campaigns made and dumped regularly, a few actually grab our attention. Some might genuinely be irresistible, and some might have content to make it look irresistible. For instance, you would have heard about the campaigns stating “Unbeatable prices, exclusively for you”, “Midnight offer, gone with the wind”, and “Avail the best dresses in the last chance to buy”. These push notifications trigger users to make impulsive shopping and super quick decisions. Most millennials shop under the influence of FOMO. A stat says that 70 percent of millennials experience FOMO on a regular basis, which counts as 7 in 10 individuals experiencing FOMO or at least feeling like experiencing the same.
Loss aversion bias is an emotion that rules the purchasing decision of customers and makes them fear losing out on better deals and opportunities. 95 percent of the purchasing decision are made subconsciously, reveals Professor Gerald Zaltman. Loss aversion can help with designing strategies for the companies and hence, increase brand engagement that requires an accurate understanding of customer behaviors.
Loss Aversion Strategies to Boost Conversion Rate & Increase Brand Engagement
· Data Sharing
When customers join in, they bring lots of data. It further helps in building collecting necessary information about the customers and using them to make some tactful marketing strategies.
Check out the exact points where customers see the gap between the current situation and what’s been missed out. Try to provide the same and fill up the gap. This kind of strategy can create wonders for your business.
· Bring in Loyalty Program Platform
Incentivizing programs are by far the most useful way to engage customers. You can create time-limited joining options for customers in terms of becoming a member with a loyalty program of your brand. It will trigger a sense of urgency and customers would love to make quick decisions and join in the loyalty program as well. The basic idea behind using this is to encourage customers in routine and make them habitual to purchase a certain product or service, this can only be possible through excellent customer experience and services which serve a purpose in daily lives, rather than just depending upon seasonal options.
· Make use of Customer Reviews
A brand that learns from its mistakes and value customer feedback tend to go longer in the business and firmer in the industry. By checking out what customers have to say about your brand you will have a better opportunity to connect through the loopholes and get something modified, upgraded and more suitable for the customers. Introduce testimonial options to be focused on the company’s website homepage, run content on providing genuine feedback, you can even make it a social trend that most of today’s generation is following. This will be a great way to connect with the users.
Loss Aversion Bias for Improving Employee Behavior
These techniques are not limited to just customers, it can help brands improve their employee experience and behavior towards an organization. Through employee loyalty programs, companies are already building a better working environment but, studying employee attitudes, some forward-looking organizations can stay at the top of the game by aligning employee satisfaction parameters to the organizational goals. The traditional benefits limits to rewards and incentives but the recognition benefits seem more lucrative. This will make an employee stick with the company, and they may feel FOMO if they change the job as well. They will work an extra hour or stay retained just to earn recognition and a reward they would love to receive from the brand.
Loss Aversion may sound fancy and a relatively new concept but is surely a go-to perspective for brands willing to upgrade their marketing strategies or simply are thinking to retain their employees more effectively. Where traditional marketing campaigns fail, loss aversion techniques pass through the lean tunnel and provide extensive results for the future. What’s the wait for? Get the strategy added to your business too!