The human sensitivity to gains and losses

When you provide a consumer with a new benefit, it will be perceived as a

gain; take away an existing benefit, and it will be viewed as a painful loss. The

same is true for cost. If you reduce a current cost, it will be perceived as a

gain; and if you impose a higher cost, it will be treated as a loss.

Suppose, for example, that a consumer finds a new dry cleaning service near

his home. Not only is the service convenient, but it costs less than it did pre-

viously, when he had to drive 15 minutes to reach the nearest dry cleaner. He

experiences a great deal of happiness, because the costs he’s used to paying

for have decreased — therefore, he considers the change as gain.

Another man, however, has received notice that his television cable company

will be increasing his cable rate and raising his monthly bill. His costs for the

very thing he’s been purchasing for years have increased, so he counts the

change a loss and experiences displeasure.

 Regardless of the degree of change, the simple factor of whether a person per-

ceives the change as a gain or as a loss plays a big role in how he’ll respond

to that change. The perception that a consumer has concerning a change in

the product or service that you offer determines whether he will adapt to that

change and often whether he will continue paying for your product or service.

When you present your consumers with what they can view as a potential

loss, you must balance it with something that they can see as a gain; otherwise

you run the risk of losing their business, because the feeling of loss wins out.