I’m halfway through reading Jonah Lehrer’s How We Decide – which is a very intriguing book that any marketer ignores at their peril – and one of the many things that has already stuck with me is this nugget – the pain of losing something (money, prestige, etc.) is always stronger than the good feeling of gaining something. This means that if a person loses $10, that feeling is twice as strong (or more) than if they gained $10.
This speaks volumes about marketing and branding, because it speaks directly to risk avoidance. People will go far, far out of their way to avoid a bad purchase, deal, wager, etc., even if it means accepting less of a gain or maintaining status quo. You see this all the time when customers pick the brand with the biggest market share, the brand that’s been around the longest, the brand that other similar businesses have chosen. That’s because, although these brands may not be the best, coolest or highest rated, because of their common use and heritage, they seem less risky than other choices.
If this is true, then what’s a small business to do? You certainly can’t compete with the biggest, oldest or most reputable/established businesses in your industry. However, you can do one thing better than many big companies: because of your size, you are nimble and agile enough to innovate your way into a customer’s life. See, in this day and age, it’s actually percieved as risky by many customers to buy something that’s not forward thinking, mostly because people don’t want what they buy to become obsolete or out-of-date. Such a purchase would be painful for a few key reasons. 1) The customer may have to purchase an updated product sooner than they want, leading to loss of money. 2) The person’s self-image takes a blow because they must admit to themselves that they weren’t a prudent shopper. 3) The person may feel left out because what they bought isn’t like the better product(s) that others bought.
Simply put: Innovation enables the small business brand to compete with the big boys because it gives you a way for your customers to avoid risk in buying your product or service.