Increase website conversions by understanding customers are loss averse - Webfactory

Loss aversion refers to the fact that people do not like to feel they are losing out on something. In fact research shows that people are made more unhappy loosing out on something than they are happy having gained something.

How to apply loss aversion to your website:
To use loss aversion to increase conversions, essentially you want to make your customers aware that by buying now that they will get a better deal than if they delay and buy later, or not at all.

You could for example run limited time offers with 20% off products, or emphasis where stock is running out. Essentially telling your potential customer that if they do not buy soon, they will have to pay more, not get as much or not be able to buy at all.

You have to be careful with these sorts of tactics because there is a fine line between informing a potential customer of a loss they could incur, and putting undue pressure on someone to make a snap decision. The key is to always ensure that you are offering a genuinely enhanced product or service to your customer if they buy sooner rather than later. If you are running an offer and it’s ending soon, telling them allows them to receive the benefit of that offer before it ends. If you have limited stock, telling a potential customer helps them avoid not being able to get the product or service later.

Quick Tips

• Inform your potential customers of any losses they could incur if they do not buy now or soon
• Always be honest, do not make up offers or pretend stock is low
• The aim is to add a bonus if your customers behave in a way which is better for you i.e. buy sooner