How to use Loss aversion to grow your SaaS

You can considerably improve your sales if you learn to use loss aversion efficiently. Here’s how to do it.

In April 2014 Pieter Levels, now well-known founder of Nomad List and Rebase.co launched Go Fucking Do it — a tool where you pledge money to achieve your goals. The idea was crazy simple: just set your goal publicly, name your pledge (can be anything, no limits) and the timeframe (for ex. stop drinking coffee completely in a month). Then stick to achieving your goal. If you fail, the money goes to Pieter. According to Pieter Levels, in 1 month the website received $30K pledges. He’s got an offer to buy the service for $45K (remind you, it was almost 10 years ago when startup prices were much less than today!) and was reached out by a fund managing $200M of venture money.

Why did everyone suddenly get so excited?

Because somewhere deep down most of us know for certain: loss aversion is one of the most (if not the most) powerful techniques to make someone do something.

How does Loss Aversion work in real life?

I found out about the Loss aversion principle for the first time when I was a first-time Mom. My 2 yo started to socialize actively on the playgrounds and I noticed (just like all parents do eventually) that they wanted only toys that belonged to other kids. Absolutely the same truck or a shovel that was successfully ignored back at home for months was magically turning into the most desirable toy ever as soon as some other kid brought it over to play in the sandbox. I was puzzled by this and started digging.

Turned out that behind this childish behavior was loss aversion.

What I also found out is that this principle never actually leave out subconscious brain and kicks off every time we are faced the possibility of losing something that we think belongs or should belong to us. I also stumbled upon absolutely brilliant field research on loss aversion run by Uri Gneezy and John A.List that they later describe in their book The Why Axis.

Scientists ran a series of experiments that proved that loss aversion works much better than rewarding when it comes down to…