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A few weeks ago, we discussed how to look good on Zoom calls and webinars. In that episode, I talked about how using a relatively new iPhone as your webcam on a relatively new Mac was dramatically better than using $700 worth of lights and webcams.
A couple of weeks later, we discussed how an economic war between China and Taiwan would cause iPhone and MacBook production to cease since the A16 and M2 chips are made in Taiwan, and the phones and laptops are assembled in China. At the end of the episode, I said I hoped that China and Taiwan would continue to get along, but in case they don’t, listeners using older devices should upgrade before it’s too late.
Both episodes gave a compelling reason to upgrade your laptop and iPhone.
But which pitch was more effective? Which caused you to act? The potential money savings or the threat of being unable to get the device you need?
After the episode about the potential shortage of chips and devices, so many listeners asked me for laptop recommendations that I’ve had to add laptops to my recommendations page.
The second pitch relied on a psychological phenomenon called loss aversion. Loss aversion describes the phenomenon that causes most people to feel losses twice as strongly as they feel gains. I wish I could say I had planned these two episodes as a case study, but it just worked out.
For authors, loss aversion can make it harder to sell books. You must convince readers that your book won’t waste their time and they won’t feel guilty buying it. Your cover and blurb must convince readers that they will finish the book and feel great after reading it.
Used correctly, loss aversion can help increase rather than decrease sales. So how do you turn loss aversion into an ally? How do you use loss aversion to supercharge your book sales, increase margins, and build goodwill with readers?
Ethical Marketing Psychology
When I talk about Marketing Psychology, I like to start by discussing ethics.
Marketing psychology can influence people’s behavior in ways they don’t realize. It is a tool. Like any tool, it can be used for good or evil. A scalpel in a surgeon’s hand is a life-saving tool, but in the hand of a murderer, it brings death. As you become more influential, you must seriously consider how you can use your influence ethically. Handle marketing tools and your readers with care.
I’m about to put a scalpel in your hands, and I want you to be able to use it with a good conscience. So how do you know you are using loss aversion ethically?
Here are a couple of ancient ethical guidelines.
First: Do Not Lie
Psychology + deception = poison. To make good decisions, people need to know the truth. If you shade the truth, you make it harder for people to make good decisions. If you feel the need to deceive people in order to sell something, stop selling that thing.
Second: Do Unto Others
The second rule of thumb is the Golden Rule: Do unto others as you would have them do unto you. We all need help making good decisions. You appreciate receiving help to make good decisions, but you feel cheated or manipulated if deception causes you to make a bad decision.
Use the power of marketing psychology to help people make decisions that are in their own best interest.
Interestingly, helping people make good decisions about your book relates to your craft. Your book needs to be so good that you can promote it with a clear conscience, knowing that it’s in your reader’s best interest to buy and read. If your book is boring or makes people feel gross inside, your book doesn’t need better marketing. It needs a rewrite!
The Science Behind Loss Aversion Marketing
In a famous loss aversion classroom experiment often conducted by psychology professors, professors randomly distribute coffee mugs to half the students and give the other half nothing. Students with mugs are asked how much they would be willing to sell their mugs for. Students without mugs are asked how much they would be willing to pay for a mug.
You would think that the students’ prices would be pretty close. But that is not the case. Students with mugs value the mug more because it is their mug, and losing it is painful. They want to be compensated for the value of the mug and the psychological pain of losing it. This phenomenon is called the endowment effect.
There has been a lot of research around this, and losses are generally valued at twice that of gains.
But loss aversion also scales with the size of the loss. If someone flipped a coin and told you, “Tales, you lose $1.00, and heads, you win $2.00,” you might take the offer since the mathematical value of the bet is $1.00. But most people would not take that same bet if the stakes were $10k and $20k. The pain of losing the money is too great, even with even odds of twice that amount.
Check out this excellent Wikipedia article for more details on loss aversion.
Maybe you’re thinking, “I don’t need a scientist to tell me losing money is painful. What does this have to do with book marketing?”
For most people, buying a book feels risky.
Most Americans don’t buy or read books.
Most authors have difficulty believing that most Americans don’t read books. As an author, your house is full of books, and you constantly buy more. But most people are not like you because, for them, buying a book feels risky.
People Feel Guilty About Not Finishing Books
Well-meaning parents and teachers pile guilt trips on children who don’t finish books. They are made to feel like they have failed the book rather than feeling that the book has failed them.
They’ll carry this guilt with them for the rest of their lives.
In adulthood, that shelf of unfinished books feels like evidence of moral failure. A little voice whispers, “If you were a better person, you would finish all those books, you worthless worm.”
This little voice spews a poisonous lie that is bad for readers and authors.
Voracious readers and frequent book buyers realize they don’t have to finish an unenjoyable book and thus enjoy buying books. Forcing yourself to read an unenjoyable book only makes you hate reading.
If you feel guilty when you don’t finish a book, I hereby permit you not to finish the books you don’t enjoy. The world is filled with amazing books, and life is too short to waste time reading bad ones.
Books Are Time Expensive
Have you ever finished a book and thought, “What a waste of time. I’ll never get back the ten hours I wasted on this book.” What a horrible feeling!
Time loss is perhaps the worst kind of loss. Losing money can be painful, but you can always make more money. You can’t make more time. Lost time has the subtle taste of death.
If a reader experiences the acrid taste of wasted time, they’ll run from that feeling for the rest of their life. Readers are averse to the loss of time and feelings of guilt.
How do authors keep loss aversion marketing from torpedoing sales?
Tactic #1: Reduce the Risk with Free
Losing money is painful. How would you feel if I asked you to pay a few dollars to listen to this podcast episode? Surely this episode is worth at least one cup of coffee. If the information helps you sell a lot more books, it could easily be worth hundreds or thousands of dollars. But the pain of paying even a tiny fee is so high that most people won’t do it.
That’s why this podcast is free. A tiny fraction of listeners support via Patreon, but they typically become patrons only after listening to many free episodes. The free episodes convince them that the extra patrons-only episode is worth paying for.
Speaking of which, in our most recent patrons-only episode, we talked about the following:
- How to jolt sales for older novels
- How to reach influencers
- BookFunnel vs. StoryOrigin
- And a lot more!
I had more fun during that live episode than I’ve had in a long time. If you become a patron, you get access to the replay.
So how do you help people overcome their fear of paying money? Give them a free taste first.
Imagine you are at the grocery store, and a lady is handing out samples of fresh strawberries. After you taste one ripe strawberry, you suddenly want to buy a whole box.
This free sample strategy is why physical bookstores allow readers to browse the books. You can walk into a bookstore, take a book from the shelf, sit in the in-store coffee shop, and start reading right then and there. Why do bookstores allow that when they want to sell books? Bookstores know that the more you read and the further you get into the book, you start to feel like the book is yours. It becomes your book.
After a while, you’re not thinking about the cost of the book. You’re thinking that you can’t leave that book in the store because you must find out how it ends. Amazon knows this strategy works, which is why they strongly encourage you to make the first chapter of your book available for Kindle Instant Preview. Kindle Instant Preview boosts sales because the sample gives readers the confidence to buy.
In fact, I recommend embedding Kindle Instant Preview on the book page on your website, which you can do easily with MyBookTable.
Readers expect to be able to read the first chapter for free. If you don’t offer a free chapter, you appear to be hiding something.
Free Short Story
Give readers a free taste of your writing by offering a short story. A short story is more than a tiny sample bite. It’s a complete meal. Most authors use their short stories as reader magnets by requiring readers to sign up for email updates to get the short story. Offering short stories as reader magnets allows you to grow your email list and simultaneously provide people with a sample of your writing.
Learn more about reader magnets and short stories in the following episodes:
- How to Grow Your Email List Using Delicious Reader Magnets with Tammi Labrecque
- How to Create a Reader Magnet
- How to Write Short Stories with James Scott Bell
One way to make purchasing your book less scary is to get your readers’ friends to start talking about the book. How do you get them to talk about the book? Give it to them for free, of course! Making your book free for a short time can be an incredible way to reignite buzz for an older book that has dropped out of the conversation. This tactic is called free pulsing, and you can learn how to employ it by listening to our episode on free pulsing your book.
When you free pulse, you offer your book for free for a few days at a time and then promote that price drop on websites like BookBub. The price drop creates a surge of downloads that causes an echo boom in paid sales as people who read the book for free tell their friends about it. The book sounds so good that their friends don’t mind paying after the free promotion is over.
The ultimate form of offering a book for free is to make it permanently free. The permafree strategy tends to work best for the first book in a long addictive series of novels that are hard to put down.
Customers get addicted because their first “hit” is free. It’s perhaps the only thing authors and drug dealers share in common.
If you have a series of three or more books with characters readers fall in love with and cliffhanger endings, you may see your overall revenue increase when you offer the first book for free.
A free book eliminates the pain of losing money and not finishing the book. People typically don’t feel bad about not finishing a free book.
Offering a book for free is one way to keep loss aversion from nibbling away at your sales.
Tactic #2: Reverse Coupons
But loss aversion doesn’t need to be an enemy. It can also help motivate your readers to buy your book now and not later. A reverse coupon can help toward that aim, particularly when you need to raise the price of your book.
But why would you need to raise your price?
Inflation is high right now, and despite the political spin you hear, inflation is not going down. While topline inflation is growing slower, the core inflation growth rate is on the rise again. Inflation works like interest in that it compounds. A 6% inflation rate over four years is the same as having 26% inflation for one year. A 26% increase is the difference between a $4.99 ebook and a $5.99 ebook.
Or put another way, each year you keep your book price the same, you get a 6% pay cut. And that pay cut compounds year over year.
Eventually, you’ll have to raise your book’s price, especially if you want to advertise profitably.
The Sales Boosting Way to Raise Prices
How will you raise the price? Will you do it quietly in the dead of night and hope no one notices?
For the love of good book sales, no! A thousand times, no!
If you plan to raise the price, blow a trumpet first. Announce to your email list, “At the end of the month, the price of my ebook is increasing from $4.99 to $5.99. This is your last chance to get it before the price goes up.”
Readers will know they are about to lose the opportunity to buy your book at the current low price, which makes inaction feel like a loss.
Suddenly, loss aversion has become that author’s friend. Knowing the price will increase adds valuable urgency and anchoring, which inspires readers to take action.
But is this ethical? Let’s look at our two rules.
The tactic of announcing a future price increase is honest. If you tell everyone you will raise the price, you must follow through.
Does it follow the golden rule? I think so. Wouldn’t you prefer that a gas station posted both today’s price and tomorrow’s higher price? If that’s how you would like to be treated, you should treat others with that same consideration.
I recently offered a reverse coupon on my course Obscure No More as it came out of beta. You may remember I made a lot of noise about the beta discount going away. I gave everyone two months of notice about the price change and sent frequent reminders. As a result, we had the best sales months Author Media has ever experienced. Zero authors have complained about the increase because they all had plenty of time to purchase before the price went up.
In this case, the price increase was not due to inflation. From the beginning, I had planned to charge full price once the course was ready. I may need to raise the price again in the future due to inflation, but before I do, you better believe I will blow a trumpet and give everyone a chance to get the pre-inflation price.
Loss Aversion: The Power Behind Scarcity
In a previous Marketing Psychology episode, we talked about the social trigger of scarcity. Part of the psychological power behind scarcity is loss aversion. If you offer only 100 tickets for a special live event you’re hosting for readers, those tickets are scarce. If a reader doesn’t buy a ticket before they sell out, they have lost the opportunity to attend that event forever.
The same is true for a limited-edition hardback. If readers don’t buy a copy before they sell out, their chance is lost.
Now that you understand loss aversion, I encourage you to re-listen to my scarcity episode. You may glean new insights now that you know about loss aversion.
Unethical Loss Aversion: Yoyo Tactics
I recently heard about a marketing tactic that made me sick. Car dealerships sometimes sell a car and hide the fact that the sale is not final in the fine print. The dealership will then “yoyo” the car buyer back into the dealership, telling them their loan was not approved. Back at the dealership, the buyer learns the price has increased, and the loan terms have gotten worse.
But this information is only revealed after the buyer has bonded with the car. Suddenly, they don’t feel like they’re buying a new car. They feel the urgency to save the car they already have. With this manipulative tactic, car dealers wring tens of thousands of dollars out of buyers.
Car dealerships are so slimy, and Tesla is wise to avoid them. Sometimes I wonder if the rise of Tesla is due in part to the perk of buying a car without having to interact with a dealership. But I digress.
To learn more about yoyoing, check out this article from NPR. NPR missed the psychological angle to the story, but they provided many heartbreaking examples.
Yoyoing is unethical. It breaks both of our ethical rules. Car buyers are deceived into believing they have purchased the car when they really haven’t. Dealerships also violate the Golden Rule, as no one wants to be yoyoed back into a car dealership.
Compare this with a pet shelter that allows you to pet sit a shelter dog for a weekend. The shelter (and perhaps even the dog) hopes that loss aversion will kick in and that returning the dog on Monday will feel like losing your dog.
Is the pet shelter method ethical? I think so because it doesn’t break our rules. It’s honest. Pet sitters know the shelter is trying to get them to adopt a dog.
It also follows the Golden Rule. The ability to return the dog is a kindness! If a pet sitter and the dog don’t click, the sitter is not forced to keep the dog. After all, the pet sitter only agreed to pet sit for a weekend.
Sponsor: Marketing Psychology for Authors
I am putting the final touches on a brand-new course called Marketing Psychology for Authors. While you can buy the stand-alone course, you may already have access to it. I’ve decided to include it for free in both the Book Launch Blueprint and Obscure No More.
If you are a previous Book Launch Blueprint student or a current Obscure No More student, you already have access to this course at no additional cost to you!
If you were on the fence about registering for the Book Launch Blueprint this year, remember that you’re not likely to find a course on the marketing psychology behind effective book promotion anywhere else.
CLR Peterson, author of Lucia’s Renaissance
Heresy is fatal in late Renaissance Italy, so only a suicidal zealot would so much as whisper the name of Martin Luther. But after Luther’s ideas ignite a young girl’s faith, she must choose–abandon her beliefs or risk her life in the turbulent world of late sixteenth-century Italy.
hmm, definitely a captivating read and an educating perspective on a growing industry. Thank you for sharing some knowledge. Will Deffinetly check out your other articles! Rubber Ducky Isopod