How Losing Money Can Increase Your Sales

Throughout this past recession, I’ve been amazed by the amount of off base brand advertising telling me how much I’ll save by buying their product.

Telegram 1 – People are more interested in ways to make or avoid losing money than saving money.

A window replacement ad that proclaims, “Stop losing over $1,000 dollars a year with your old single pane windows,” will always outsell an ad that states, “Save $3.00 dollars a day in reduced energy consumption.”

It’s a big reason why buy one/get one offers work so well. People interpret the gain as a benefit – not the savings.

Interestingly, another insightful key to prove this theory is to conduct a Google search to determine popularity and interest.

When you do a Google search on the terms ‘make money’ (web – 931mm/892mm images) vs. ‘save money’ (web – 533mm/images – 436mm images) making money beats saving money by a 2 to 1 margin!

Also, keep in mind that losing money is more closely related to making money than saving money.  And, because losing money is more painful than saving money, promoting how people can avoid losing money will always outperform a savings claim.

Telegram 2 – All things being equal, people will do more to avoid pain than to gain pleasure.

Here’s proof.

I’m offering to flip a coin and have you call it heads or tails (equal odds) and promise to give you $1 million dollars if you win, but if you lose you have to pay me $100,000.  Will you take me up on it?  99% of average people (not multimillionaires) would not.  Why?  Because it’s so painful to LOSE $100,000.

OK. How about instead of 1,000,000 vs. $100,000 what about a bet on:
$100,000 vs. $10,000 (uh, no) or…
$10,000 vs. $1,000 (hmmm..no) or…
$1,000 vs. $100 (hmmm, OK) or…
$100 vs. 10 (Sure) or…
$10 vs. 1 ? ABSOLUTELY!

Same odds, same ratio but varying levels of pain!

The key is to test your customer’s levels of perceived and actual levels of pain and loss.

When you understand this simple exercise you cannot lose!

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