The Secret to Loss Aversion-centric Design

Those who follow the behavioral economics space already know that loss aversion plays a huge role in how humans make decisions, but how does it apply to marketing and design?

The term itself – Loss Aversion – is fairly self explanatory: a distaste for or disliking of loss. On the surface, it seems almost too obvious – who among us doesn’t dislike loss? When we look at loss aversion in terms of the behavioral economics of design, however, there is more to the story than meets the eye.

It seems logical that a gain or loss of equal value would produce equal amounts of joy or sorrow, but this is not the case. Imagine that I offer you a bet. I’ll flip a coin and if it lands on heads, I’ll give you $20. If it lands on tails, you have to give me $20. Would take the bet? Most people would need to have the chance to win at least double the potential loss before they would play. Psychologists have found that the potential of loss tends to weigh heavier and cause stronger emotions in people than a potential gain. The weight of the fear of loss can impact the decision making process, more so than the desire for gain. This is the root of loss aversion.

So what’s the secret?

The key to utilizing loss aversion is all in how you frame your offering. In marketing, it’s natural want to talk extensively about the features and benefits a user stands to gain from the offering. What the theory of loss aversion tells us, however, is that highlighting potential losses such as FOMO (fear of missing out) might actually capture a customer’s attention and emotional interest more. The followup to this is to make clear what actions are necessary in order to avoid the loss you’ve just highlighted. This could be buying a certain product, signing up for an email list, or clicking on a specific offer. After all, psychological studies on loss aversion tell us that people are actually willing to risk more to avoid loss than they are to gain something. Framing a benefit as a way to avoid loss will make prospective customers more willing to take the risk of pursuing your offering.


With this understanding of loss aversion it’s time to move on to design and implementation. The most important thing is to run your marketing materials through the “loss aversion filter” – what does your user stand to lose. Here are some best practices you can start with:

Create Ownership

If you can, offer a free trial or a money back guarantee. This technique works especially well with higher value considered purchases, but can be applied to nearly any product. By giving your customer the chance to “own” your product or service, it will be that much harder to give it up.

Frame the Loss

When framing a product, describe losses in terms of actions visitors can take to prevent them. An example in email marketing would be, “Order within the next 6 hours or your free shipping offer will expire.” This way you directly correlate the desired action with loss prevention in the mind of the customer.

Benefits are Facts

Wherever possible, the benefits of your product or service should be expressed as nouns. This leads customers to view them as guaranteed and without risk. For example, you could describe a product as being made from “ultra durable material,” for a benefit statement, and say “won’t rip or tear” to appeal to the loss averse consumer.

Understanding loss aversion is an incredible eye opener, and you’ll start to see these, and other tactics in marketing materials and campaigns all over the world. The real secret is to use these same techniques in your own marketing efforts. WEVO helps pinpoint these opportunities and identify how effectively you have framed your offerings from a wide variety of behavioral economic principles, including loss aversion. With WEVO, you can test and compare different versions of your site before coding or launching, to ensure you put forth the site that leads to maximum conversion, and a more satisfied customer.

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