A few months back I received a pitch letter from Amazon with a markedly negative tone. You’re not taking advantage of all the Prime benefits that you’re already paying for, it admonished. I could be watching all kinds of movies and TV shows, the letter explained. What was I waiting for?

Just last Friday another letter arrived. This one was from Geico, and it had two pitch lines. The first said I might be overspending on auto insurance; the second talked about how much their new customers were saving.

These letters got me thinking about how we’re programmed to respond to negative and positive choices.

Buying motivations come in two primary flavors. One is the positive desire for gain; the other is antipathy to losing out. Of the two, aversion to loss is by far the more powerful driver.

The phenomenon of loss-aversion has received lots of scientific attention. In 1981 psychologists Daniel Kahneman and Amos Tversky asked two similar groups of subjects to choose between a pair of solutions– one conservative and one riskier — that could mitigate the damage from a disease threatening to wipe out a certain population.

The statistics and projected outcomes for the conservative and riskier solutions were identical for both groups, but one was worded in terms of how many people would be saved, and the other in terms of how many would die.

Amazingly, 78% of subjects chose the riskier solution when the dilemma was couched in terms of loss, compared to 28% when it was framed positively in terms of lives saved.

Because people are wired to fear loss more than they crave gain, negative messages are more potent motivators. When it comes to losing what we already have, we’re less averse to risk, and we’re more daring.

As Kahneman and Tversky put it, “In human decision making, losses loom larger than gains.”

Insurance, of course, is all about avoiding loss. Those of us who sell insurance (or anything else for that matter, including ideas or causes) can benefit from seeing how minds weigh options.

When faced with negative messages that caution, “Don’t miss this opportunity,” understanding the primacy and potency of loss-aversion helps us see the actual cost/benefit of our decisions more clearly and dispassionately.

From the sellers’ point of view, as long as we’re not intending to manipulate people to act against their own interests, the power of loss-aversion can be a versatile means of influence.

• Fitness applications use the principle to strengthen compliance with weekly workout regimens. Keeping track of your exercise sessions shows you what you’ve already invested and discourages you from slacking off and losing the value you’ve accrued (or gaining back the weight you’ve already lost.)
• Apple famously introduced the first generation Macs by offering a free loan of their incredible new machine. At the end of the 24-hour period, people had to give up a cool new toy they’d developed some attachment to, or plunk down a few thousand to not have to give it up. Needless to say, lots of trial users couldn’t bear to let go of their Macs.
• Scarcity is another way to promote that sense of loss-aversion. Have you noticed how you’re apt to go for more expensive seats or hotel rooms when time is running out and choices are limited?
• In our telemarketing work, it can be quite magnetizing to let prospects know that our clients’ calendars fill up quickly. The demand for appointments seems to increase with the scarcity of available dates.
• When you have products or services that lend themselves to giving people deadlines, limited trial periods, or test drives you can harness the potency of loss-aversion and really deepen your sales traction.

Have some ideas about loss-aversion you’d like to share? Let us know in the comments section right below.