Frontline Perspectives

You may not be surprised to hear that we humans hate losing. But do you know just how much we hate it? The answer is: much, much more than we like winning (and we really like winning). Believe it or not, people subconsciously avoid loss so strongly that — even on the most rational decision-making process — that how the fact is framed can have a drastic effect. Simply hearing the statement framed as a loss, rather than a gain, can change how people respond.

Consider this hypothetical scenario:

• A virus threatens to kill 600 people in the U.S. and two programs are proposed to combat the outbreak.
• “Program A” guarantees exactly 200 people will be saved.
• “Program B” gives a 33% chance that 600 people will be saved, and a 66% that no people will be saved.

As outlined in Jonah Lahrer’s 2009 book, “How We Decide,”  a sample of U.S. physicians was asked to recommend one of the two programs.

For this hypothetical, 72% of doctors chose “Program A,” the sure thing, over the riskier “Program B.” This makes common sense, right? People will take the guaranteed win over the small chance to save everyone.

But now consider this scenario:

• A virus threatens to kill 600 people in the U.S. and two programs are proposed to combat the outbreak.
• “Program A” guarantees exactly 400 people will die.
• “Program B” gives a 33% chance that no people will die, and a 66% that 600 people will die.

Given this scenario, 78% of doctors chose “Program B”. Yes, “Program B”. Same math. 180º shift in preference.

Framed as a loss, “Program A” was completely transformed, making even the most “rational” scientists eager to participate in a questionable gamble just to avoid it. Welcome to the phenomenon called loss aversion.

So what are the B2B marketing lessons to learn here?

First, in the broadest sense, business marketers should all get used to the fact that our audiences are not the “rational decision makers” we often think they are — far from it. Neuroscience continues to show us just how people make decisions (even business purchasing decisions) primarily with emotion — only to later justify those decisions with rationality. Emotions are informed by framing and context. So no matter how cut and dried you think your features and benefits are, always remember that HOW you communicate will have just as much impact on your audience as WHAT you communicate.

Secondly, loss aversion is one of the most predictable manifestations of emotional decision-making. And this predictability is where the marketer’s advantage is found. Because people are strongly motivated to avoid loss, it can be valuable to position your product or service as one that helps them avoid losing. Just be sure to do it in a way that doesn’t associate you with a negative, or losing tone. You don’t want to become “the loss” that customers avoid.

I’ve found that you can achieve this balance most effectively at the lead generation level of communication, rather than at the aspirational brand level. Here are a couple things to try the next time you do some lead generation:

1. Try a split mailing where the envelope teaser (or subject line on an email) is framed as “a gain” on one half of the list and as “a loss averted” on the other half. Compare the results.
2. Another split test. On half of the list, rather than framing a give-away premium as something people will get if they respond, frame it as something that’s already there for them which they will lose if they don’t respond. Compare the results.

Hope you have the opportunity to try these suggestions out. I’d love to hear any other ideas people have for how to apply loss aversion to B2B initiatives. And if you have a chance to test the suggestions above, let me know what kind of results you get.