A few years ago, I taught an Artificial Intelligence class to a group of college students. In one of my lectures, I instructed them how to program a computer to make decisions when the outcome of an action is uncertain.
During this particular lecture, I had a revelation about human behavior as it relates to humans making the decision to buy or not buy a product/service. The conclusion was that a large majority of people will only buy your product or service once they perceive they are losing out; if they don’t buy your product/service.
Let me Explain ...
Here are two questions I want to ask you. However, before you answer them, really give it some thought.
- Q1: Which alternative would you choose?
- a) A sure gain of $240
- b) A 25% chance of gaining $1,000 and a 75% chance of gaining nothing
- Q2: Which alternative would you choose?
- c) A sure loss of $750
- d) A 75% chance of losing $1,000 and a 25% chance of losing nothing
For question #1, if you chose A, then you join the ranks of most people. You see 84% of people surveyed answered A to question #1 because choice A is a risk-avoiding position.
When this group of people is presented with an offer to buy something, likely they are not going to buy. They aren’t going to risk losing/spending their money. This is like the old saying, “A bird in the hand, is worth two in the bush”.
For question #2, if you chose D, then you are among 91% of people surveyed. Choice D is a risk-seeking position in the face of a certain loss. People would rather risk a big loss if it gives them the possibility of avoiding a certain loss.
In this case, these people will risk spending lots of money on a product/service; if they believe the product/service will help them avoid a certain loss.
By the way, mathematically, you should have chosen B for question #1 and C for question #2. These two choices mathematically would give you the better outcome. Sounds crazy doesn’t it? You should be risk-seeking in the face of gaining, and risk-avoiding in the face of losing. But that how’s the raw numbers work out.
So What ...
You have a much better chance of selling your product/service when people feel like they are losing out, if they don’t buy your product/service.
For example, if your business is not making money, you will be more inclined to buy a marketing product that will give you a reasonable chance of making money. You will buy it because you are feeling the certain loss of not making money, and you are now at the point where you are willing to spend lots of money to avoid this possibility.
Here is another example; event promoters will give a discount on tickets for a limited amount of time when they first promote an event. When that time has expired, they will raise the price.
Let’s analyze the affect this has on your mind. When you hear this offer you feel like if you wait too long to buy these tickets, you will miss out on this great discount. So you are feeling a certain loss if you don’t buy now.
This affect is also true with lifestyle products. Women buy make-up because they feel a certain loss of beauty if they don’t buy make-up. Men buy expensive cars because they fell a lost of status if they are driving a beat-up used car. And this list goes on and on.
Jesus used this effect also …
There was a man of the Pharisees, named Nicodemus, a ruler of the Jews: The same came to Jesus by night, and said unto him, Rabbi, we know that thou art a teacher come from God: for no man can do these miracles that thou doest, except God be with him. Jesus answered and said unto him, Verily, verily, I say unto thee, Except a man be born again, he cannot see the kingdom of God. – John 3:1-3
Here we see that Nicodemus is feeling a since of certain loss of not entering into the kingdom of God. He is ready do what it takes to enter the kingdom of God, and Jesus provides the answer to him that satisfied his feeling of loss.
Notice, also, that Jesus mostly used the word “Saved” in the Bible to describe what He was offering. What are we saved from? We are saved from the curse of living a life without God and going to hell when we die. Jesus said
...I am come that they might have life, and that they might have it more abundantly. – John 10:10
Usually when people perceive the certain loss of going to hell, they are ready to receive Jesus’ answer to this problem. In fact, they are ready to give the rest of their lives to Jesus. However, people who don’t feel the need to be “Saved” from anything usually don’t except Jesus.
How to apply this in your business ...
First, I would say please don’t make-up a false sense of loss just to sell your product/service. When Jesus used this principle, people really where losing out on eternal life.
But, if your product/service truly helps people avoid a certain loss, you can increase your sells when you point out that loss to them.
For example, if you sell women’s hair care products, you could point out the strong possibility of hair loss if she doesn’t take proper care of her hair. Most women surely don’t want hair loss. So, you can offer your product as a solution.
Really most businesses were created because a problem existed. Your goal in your marketing material is to simply point out that fact truthfully. Then, eventually people’s natural since of lost will kick in and they will gravitate towards what you are offering.