The Brainy Business | Understanding the Psychology of Why People Buy | Behavioral Economics

Have you ever wondered why it's blindly accepted to just do things the same way they’ve always been done? Have you noticed how a new business can completely disrupt an industry by doing things totally different? Sometimes they put established companies out of business, even though the original business could have implemented the same strategies before the disruptor. A big reason this happens is normalcy bias.  Normalcy bias is where the brain believes that everything will be normal and waits for things to be normal again in a time of crisis. This principle not only applies to business, but it very much applies to some of the reasons many people weren't prepared for the coronavirus pandemic even though it had been on the news weeks before the shutdown. This normalcy bias episode is directly influenced by episode 91. Coronavirus and How the Human Brain Responds to Pandemics. If you have not yet listened to that episode…I highly recommend it. There is so much going on right now with new announcements every day of countries taking new and very important precautions to stop the spread of this disease. That episode talks about why the brain is wired to react the way it does during a novel and frightening situation like this, and why we all feel inclined to hoard lots of supplies like toilet paper even when we know that is a bit irrational. Normalcy bias is very much tied in with the situation we all find ourselves in as coronavirus is changing our entire world. It is also a bias that you can overcome to benefit your business. It’s also something we are talking about in the BE Thoughtful Revolution.  If you’re interested in joining the BE Thoughtful Revolution, you can get a 7 day free trial and a 50% discount using the code HALFOFF through March 31, 2020.  Show Notes: [03:39] Normalcy bias is the tendency for the brain to believe that everything will be normal – and to wait for things to be normal again in times of crisis or change. This impacts both sides of change. [04:20] It's easy to assume that things will stay the same and remain normal. This combines with availability bias and time discounting. [05:09] We have a hard time preparing for something before it happens. [05:48] Disruptors are able to infiltrate because those in the industry are too close, and their normalcy bias is telling them that things will always be the same. [06:09] Disruptors can see things differently, because they aren't subject to the same constraints of the brain. [07:29] Progressive’s head of marketing “fires himself” every 12 to 18 months to reset as if he just got hired. [10:03] Normalcy bias makes it so we all don’t properly prepare for or anticipate a big change. The other side of this, is that once change is thrust upon us, while we are in the midst of it…we cling to “normal” more than ever. [10:28] The brain grieves for what used to be, what it was used to, and its inclination is to ride out the storm until things are normal again. [11:12] Our brains love the status quo and what they are used to. [12:02] An example of the finance industry, status quo, and Apple Card.  [14:29] The desire to wait and see…to weather the storm when you are in the midst of change…is normalcy bias keeping you stuck. If you aren’t careful, it can cause you to miss the boat and your business could be in serious trouble. [15:47] My brain is constantly wanting to say that this is a temporary setback. I can’t rely on that being the case. My business model needs to adapt to the possibility that there may only be a few conferences in the coming months. [16:44] This is the time to look at other opportunities: what can be done virtually? [17:33] I also need to make sure that I am investing time and energy into what is the best fit for the market. What do people want, and need and where does that coincide with my expertise? [18:29] Having too much reliance on any particular product line, client, or type of service is always something that should be reviewed. [19:07] If you are listening to this episode right when it comes out or shortly thereafter, coronavirus is presenting the opportunity for you to practice getting out of your own normalcy bias and looking at your business differently. [20:04] If you aren’t already a member of the BE Thoughtful Revolution, please do join us now. You can take advantage of a 7 day free trial if you join by March 31, 2020 and use the code HALFOFF to get a 50% discount. [20:41] Normalcy bias is constantly impacting you in life and business. Now is the time your brain wants you to wait and see…and I’m here to tell you that strategy will not suit your business well.   Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.   Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram 91. Coronavirus and How the Human Brain Responds to Pandemics Join the BE Thoughtful Revolution Use code HALFOFF by March 31, 2020 and take advantage of a 7 day free trial The Continuity Principle: a Unified Approach to Disaster and Trauma The Normalcy Bias and Its Impact on Security 15: Availability: Why People Are More Likely To Get Flood Insurance Right After a Flood: A Behavioral Economics Foundations Episode 51. Time Discounting: The I’ll Start Monday Effect – My Favorite Concept!: A Behavioral Economics Foundations Episode Jeff Charney, Progressive CMO: You Better Out-Create 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 42. Apple Card: A Behavioral Economics Analysis 19. Herding: Come On And Listen…Everyone Else Is Doing It: A Behavioral Economics Foundations Episode

Fundamental attribution error is another example of a behavioral economics concept with a really terrible name. Similar to my choice to call “hyperbolic time discounting” the “I’ll start Monday effect” fundamental attribution error is one where I think we can benefit from a simpler name, I like to call this the “Pot / Kettle Phenomenon.” You may be able to tell from that name a little bit about how this concept works, but here’s the simple explanation and then we will get into the details. If you have ever heard the phrase, “that’s like the pot calling the kettle black” we are basically talking about fundamental attribution error – when you use different criteria to think about yourself and how you are acting than you use to think about and judge others. Today, I explain this concept and share examples that bring it to life. I also give you an actionable five step plan to change the way you react to others and have less instances of this phenomenon.  I’ve received an overwhelmingly positive response from listeners about last week’s episode about coronavirus and why our brains react the way they do in pandemics. If you’re still wondering why people are hoarding toilet paper, this episode will help explain why.  If you’re interested in joining the BE Thoughtful Revolution, you can get a 7 day free trial and a 50% discount using the code HALFOFF learn more here.   Show Notes: [04:38] FUNDAMENTAL ATTRIBUTION ERROR is another example of a behavioral economics concept with a really terrible name. I prefer to call this the “Pot / Kettle Phenomenon.” [05:16] “That’s like the pot calling the kettle black” is basically talking about fundamental attribution error. It's using different criteria to think about yourself and how you are acting as opposed to how you would think about others and how they act. [06:16] How do you feel about someone who cuts you off in traffic? How do you feel about yourself when you cut someone else off in traffic? When thinking about yourself, you know you are a good person and this one act doesn’t carry over into your interpretation of your entire personality. [07:39] When you hear the story of someone else who you may have labeled as “bad,” you'll have empathy for them when you understand their story - like the Wicked Witch of the West.  [08:26] Why can't we stop ourselves from doing this and realize how often it impacts our personal and business relationships? [08:39] Even when we know about the rules our brain uses to make sense of our surroundings, it doesn’t mean we can just change them. [09:43] You have to use your conscious processing over the top of the thing your subconscious wants you to believe. [10:01] Your brain is biased to think of you (itself) as different and better than others…especially people who are not like you. You don’t have to let that immediate reaction form a lasting impression of someone else. [11:01] In the workplace, think about someone who shows up late to your meeting…what is your immediate thought about them? You likely think, “Ugh, he is so rude and disrespectful” this can then combine with the focusing illusion, so that you only notice times where the person in question is doing things that are rude and disrespectful. [12:16] INTRINSIC VS EXTRINSIC The big difference between the way we see others and how we see ourselves is the intrinsic story compared to the extrinsic story. [12:42] If someone’s personality or their disposition led to the lateness, it is intrinsic or internal attribution. If it was due to the situational factors, it would be external. [14:37] Steps to change the way you react to others: 1)  Decide you want to work on this and understand why it’s important to you. 2)  Choose an initial group or person to start the process with. 3)  Reframe your in-group 4)  Consciously adjust to extrinsic attributes for a decent number of total interactions (30 days is a good rule of thumb for people you see often) 5)  Move to the next group [16:26] If you have been passed up for a promotion or been told you aren’t a team player or feel like everyone is out to get you… fundamental attribution error could be a culprit. [16:44] Fixing your mindset in regards to the way you think about others is about your choice. You can’t change them or their responses to situations. [19:43] In the “in-group” perspective shift, it will take a little time at first where you have to consciously remind yourself to not have an “us versus them” mentality. [22:58] Resist the urge to use the same “good thing about them” every time. [24:21] Once you have completed the process with the first group you can move on to the next one. And the good news is, this should get easier over time. Unlike other goals which need to be limited, this can combine and add other groups where you start to use these techniques whenever you are ready. It is a positive snowball. [26:00] I want to talk a little about the flip side of the Pot / Kettle Phenomenon. It's important to look at your own behavior the way others do. Try to stop writing an extrinsic story for why it is ok. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram Join the BE Thoughtful Revolution Use code HALFOFF by March 31, 2020 and take advantage of a 7 day free trial Fundamental Attribution Error 91. Coronavirus and How the Human Brain Responds to Pandemics 51. Time Discounting: The I’ll Start Monday Effect – My Favorite Concept!: A Behavioral Economics Foundations Episode 45. Overview of Personal Biases 46. Biases Toward Others – Including Groups Thinking, Fast and Slow 89. Focusing Illusion: Why Thinking About Something Makes It Seem More Important Than It Is (A Behavioral Economics Foundations Episode) 67. How to Get (and Stay) Motivated 70. How to Set, Achieve & Exceed Brainy Goals 76. The Brainy Benefits of Gratitude Here's Why Rushing to Back-to-Back Meetings Is Hurting Your Reputation Why Learning To Embrace Criticism Should Be Your Top Resolution This Year

Coronavirus (or COVID-19) is everywhere on the news, and everyone's talking about it. The statistics and status of outbreaks are changing rapidly, and there is uncertainty around the virus. I can't answer all of the questions surrounding this issue…(no one can at this point) but I  hope this episode will help you understand a little bit more about how the human brain responds to pandemics. I'm going to talk about how the way our brains work affects our reactions in situations like this.  We'll start with an example of framing. What do you think of when you hear a “state of emergency” is declared? I live in Washington where we had the first coronavirus death and the first state of emergency declared in the US. California is the second state to have declared a state of emergency. “State of emergency” is a name that doesn’t help contain public fear. I understand why it's called this and why it's important to declare it…but…talk about a framing issue.  I also talk about the focusing illusion and how focusing on something makes it seem more significant. I'll cover several other concepts that apply to what goes through our minds in times of uncertainty, danger, fear, and panic. I'll also cover opportunities to make the most of things and lots and lots of informative links to help you educate yourself about the current situation.  It is important to note that the information about coronavirus specifically is changing rapidly – what I put in my notes and record today will not be accurate by the time this goes live on March 13 and after. Also, there is no judgment or criticism of choices any person or country or entity has made. The intention of this episode is to explain how our brains are wired to work during times of uncertainty, like the coronavirus pandemic.  Show Notes: [02:54] I've been reading a lot about coronavirus lately, and it's a big deal. I live in Washington state where we had the first recorded coronavirus death in the US. [03:32] Declaring a state of emergency is definitely a framing issue. When the brain hears this, it doesn't take it lightly. It wonders what the emergency means and creates more panic than is helpful. [03:58] The human brain has a lot of capacity to process information: when given something new and unknown it will run rampant. [04:15] Our brains will over analyze and freak out a little bit. Focusing on something will make it feel more important or significant. This is the focusing illusion. [04:36] Our counterfactual and prefactual thinking will also ramp up and go into overdrive. [04:59] A lack of control is a breeding ground for fear and a brain bonanza. [05:19] New or unknown things are scary, because we can't categorize them using the concept of relativity. We have nothing to compare it to. [06:17] Probability neglect is where we drastically overestimate our own personal risk in a situation. [07:21] We also have a zero risk bias where we would rather eliminate all the risk we can. [08:37] Our inability to properly understand probabilities and aversion to risk AND need for control AND penchant for the status quo all combine in the worst possible way when we are confronted with an unknown, highly contagious disease. [09:05] Availability bias is when our brains believe what we hear most often to be true. [10:47] I want to make sure everyone knows that I know we are talking about real humans – each of those numbers represents a person: mother, father, sister, brother, friend. I do not take this lightly as I share the details throughout the episode. [13:20] Why don't we hear about (or get as scared by) the flu-related deaths that happen every year? It's because we've all had the flu, and it's a known entity.  [14:02] Our availability bias says that flu is annoying, but it's not that big of a deal. [14:37] The recommendations to stop the threat of coronavirus are the exact same recommendations to stop influenza. [15:18] Availability bias is a huge culprit in the reaction to the coronavirus. The focus is on the scary stuff. [16:32] The unknown variables of the coronavirus are what make it really scary to the brain. [17:47] We need to maintain these better habits that will keep us healthier and happier well into the future. [18:02] Why is it so difficult to change habits? We are used to habits. We have subconscious rules stuck in our brain.  [20:30] Changing habits takes diligence at the beginning, and continued effort to maintain. Conscious processing can only do so much work at the same time.  [21:44] Before you react, stop and ask if your behavior is rational or if you need this. Take a moment to breathe and focus. [22:36] One other problem we have when it comes to changing behavior, is our brain’s natural risk thermostat. Essentially, when we do one thing good, we feel justified slacking on something else. [23:52] If we can all do only one thing well to fight the spread of viruses, because that one thing has a bunch of hidden steps, we should be focusing on the one thing that is proven to be most effective. [24:20] No one wants to be diagnosed with coronavirus. The mentality of staying home and not getting tested for fear of what others will think is a combination of herding and an ostrich or head in the sand type of response. [26:11] If people don't self-quarantine or get tested when they get sick, there will be more outbreaks. It's our brains natural reaction to avoid risk, but it's best to get tested. [27:47] One person making a rash and extreme decision can cause a huge chain reaction that is difficult to stop. [30:13] When we feel a lack of control, of uncertainty, like we do when a novel virus is spreading around the world, we get scared and the brain looks for something to do and control. [31:29] This is an opportunity to revisit the way you have always done things. [32:59] What can you be doing today, while people aren’t traveling and the status quo is already disrupted, to look at your offering and find opportunities to make your company better?   Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram Coronavirus and Its Global Sweep Stokes Fear Over Facts. Experts Say It's Unlikely to Produce 'Apocalyptic Scenario' Am I Going to Get the Coronavirus and Die? Psychology of Viral Pandemic: What We Need to Know and Do How Bad Will the Coronavirus Outbreak Get? Here Are 6 Key Factors Coronavirus Disease 2019 (COVID-19) Situation Summary What Role Did Rumour Play in Australia's Toilet Paper Frenzy? 'I Never Really Felt Unwell' - Coronavirus Patient Why We Can’t Think Straight About the Coronavirus (and What to Do About It) 16. Framing: How You Say Things Matter More Than What You’re Saying: A Behavioral Economics Foundations Episode 14. Scarcity: Why We Think Less Available Means More Value: A Behavioral Economics Foundations Episode 21. Habits: 95% Of Decisions Are Habitual – Which Side Is Your Business On?: A Behavioral Economics Foundations Episode 19. Herding: Come On And Listen…Everyone Else Is Doing It: A Behavioral Economics Foundations Episode 89. Focusing Illusion: Why Thinking About Something Makes It Seem More Important Than It Is (A Behavioral Economics Foundations Episode) 68. Counterfactual Thinking: Why We ‘What If’ And ‘If Only’ (A Behavioral Economics Foundations Episode) 71. Prefactual Thinking: How to Turn “What If” Into “Why Not” – Behavioral Economics Foundations 12. Relativity: The Brain Can’t Value One-Off Items: A Behavioral Economics Foundations Episode The Cognitive Bias That Makes Us Panic About Coronavirus 15: Availability: Why People Are More Likely To Get Flood Insurance Right After a Flood: A Behavioral Economics Foundations Episode Live Coronavirus Data Flu Shot Better Than Last Year, Despite Tough Season for Kids Influenza (Seasonal) Changing Behaviour to Slow Coronavirus Spread Is Easier Said Than Done Behavioural Strategies for Reducing Covid-19 Transmission in the General Population Handwashing Can Stop a Virus—So Why Don’t We Do It? Hand Hygiene: Why, How & When? Even as Behavioural Researchers We Couldn’t Resist the Urge to Buy Toilet Paper 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 51. Time Discounting: The I’ll Start Monday Effect – My Favorite Concept!: A Behavioral Economics Foundations Episode About HR Answers Remote Work / Telecommute Sample Policy & Employee Agreement 90. Habit Weekly: A Discussion With Creator Samuel Salzer COVID-19: Implications for Business

I am very excited to introduce you to Samuel Salzer, founder of the super awesome resource Habit Weekly. He provides content via a newsletter and LinkedIn every week with lots of great updates in the behavioral world. There are links for job openings in behavioral science around the globe, upcoming conferences, top podcasts and articles of the week – it is a really fantastic resource I recommend everyone subscribe to. Today, we discuss how Samuel became interested in behavioral science and his interest in habit formation. We also talk about not creating content for the sake of creating content. Samuel discovered firsthand that if you create what people actually want, they will ask you for more. This is so applicable in business. Find out what people actually want and give it to them. Put good stuff out into the world and people will want to engage with you.  Show Notes: [03:03] Samuel has always been an entrepreneur and started his first business when he was 16. [03:51] He moved from Sweden to Australia to study accounting and economics. He also started doing research on behavioral economics. [04:34] This opened his eyes to the nuance of human decision-making. [05:35] He also wanted to use this knowledge to help his mother establish a meditation habit. [06:38] He started studying the science of habit formation, behavioral science, and psychology.  [07:37] Samuel is his first test subject, and he does his share of self-experimentation.  [08:44] He helps clients create behavior change for good. [09:31] You are succeeding if you create value for your customers and a solution for their problem. [10:55] Samuel likes to focus on the underlying principles of what he is trying to do. [12:29] Samuel likes the concept of friction: both decreasing and increasing it.  [13:16] There are moments when it's beneficial to increase friction. You can strategically increase friction to eliminate negative habits. [16:20] Samuel is fascinated by habits and how they are formed. There are also ways to boost behaviors. Such as loss aversion or framing behaviors to make them more motivating. [17:07] Habits can have a trigger and a reward or consequence. There can be a negative (or positive) consequence after a behavior. [20:25] We often have habits or things we do that are designed to remove a negative.  [22:53] The concept of "eating the frog" or doing the hard thing first. [25:43] Samuel started sharing links on LinkedIn. This eventually evolved into Habit Weekly. It's now a mailing list that sends content related to behavioral design on a weekly basis. [28:04] You know you found something that people really want if they are reaching out to you asking you to create a mailing list. [30:09] Samuel works to make sure that anyone interested in behavioral design has the best resources throughout the week. [33:26] Accurate research and due diligence are very important to Samuel. [34:02] Samuel is excited about the future of behavioral design. In his opinion, the field is in the adolescent stage. The mature stage will be more about the process. [36:44] He's excited about being able to take all the tools and components and using them together to accomplish great things.  [39:46] Samuel's super power or wish would be to see the world through other people's eyes. That's part of what has drawn him into his work. A good book or movie can show the world from another person's perspective. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram The Brain Science Behind Your Shopping Decisions (watch Melina’s TV interview!) Habit Weekly Samuel Salzer Samuel Salzer on LinkedIn Samuel Salzer on Twitter Eat That Frog!: 21 Great Ways to Stop Procrastinating and Get More Done in Less Time 81. How to Finally Change Your Behavior (So it Sticks) 16. Framing: How You Say Things Matter More Than What You’re Saying: A Behavioral Economics Foundations Episode 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 72. Friction – What It Is And How To Reduce It, with Roger Dooley 51. Time Discounting: The I’ll Start Monday Effect – My Favorite Concept!: A Behavioral Economics Foundations Episode 58. Partitioning: Why We Eat More Cheetos From A Party-Sized Bag Than A Fun Size: A Behavioral Economics Foundations Episode 32. The Overwhelmed Brain and Its Impact on Decision Making 34. Optimism Bias: The Good And The Bad Of Those Rose-Colored Glasses: A Behavioral Economics Foundations Episode 85. What is BrainyTab? An Interview with the Founders Radu and Raluca Judele 23. Reciprocity: Give A Little, Get A Lot: A Behavioral Economics Foundations Episode 30. Booms and Busts

In a previous episode, I talked about a study on happiness which found that when asked if people thought they would be happier if they were to suddenly be a paraplegic or suddenly win the lottery, most everyone believes they would be happier winning the lottery and significantly less so to lose the use of their limbs. In actuality, these two groups of people – paraplegics and lottery winners, are essentially just as happy as anyone else. Why would this be and why would people predict it incorrectly? It has everything to do with the focusing illusion. When people only focus on one piece of a giant puzzle that piece ends up with far too much weight. Losing the use of your legs or winning the lottery is just one small piece of an entire life. There are so many factors that play into happiness, and while these pieces are significant and impactful in many ways, they don’t tend to have an impact on overall happiness like we think they would. This episode is all about the focusing effect and how these principles can be used in your business and your life. I talk about focusing on that one thing and making it incredibly clear to your target market. I also talk about asking yourself what people should focus on when thinking about your brand and what would motivate your ideal customer to take action. Show Notes: [04:44] A study about happiness that illustrates the focusing illusion. [05:47] Kahneman did a test back in 1998 to find out if Californians or Midwesterners were happier with their lives. [06:24] If you said Californians, you would be wrong. A focusing illusion bias puts more weight on things like sunshine and a seemingly laid back lifestyle. People adapt to their surroundings. [07:06] “Nothing in life is quite as important as you think it is while you are thinking about it.” - Daniel Kahneman [07:53] Focusing on something, not surprisingly, puts a whole bunch of attention on it. [08:59] Think about decluttering and how you would feel getting rid of something you might need. The focusing illusion is combining with counterfactual and prefactual thinking to maintain your status quo bias and keep you stuck. [09:54] When you are asked to think about how happy someone would be or how angry something would make you or how satisfied you are or would be…your brain will focus WAY too much on a few key aspects and answer in a way that is just not in alignment with reality. [10:47] Social proof. People are more likely to take action based on the thoughts and actions of others. They are also likely to weigh a few key items as the most important indicators of their happiness. [12:32] Our brains are split up into two processing systems: the subconscious is super busy filtering through 11 million bits of data per second, while the conscious can only handle 40 bits per second. Your brain will sort through all of the data to validate what you're focused on. [13:20] Anything you want to believe (or that all important first impression) will be supported by the focusing illusion. [13:36]  Another example by Kahneman from Thinking, Fast and Slow using the halo effect. [15:25] Initial traits in a list changed the very meaning of the traits that appear later. The sequence in which we observe characteristics of a person is often determined by chance. Sequence matters, however, because the Halo effect increases the weight of 1st impressions. [16:40] When you are focusing on something, a particular aspect, you build it up in your mind and it changes your perception, expectation, experience, and memory of an experience. [17:20] There's a high likelihood that you will create bias in questions asked on surveys - hire an expert. [18:08] Focusing on finding examples to back up your brain’s earlier perceptions is confirmation bias. [19:17] It's good to take a step back and ask yourself if your bias may be guiding your interactions. [19:48] I share the story that was inspiration for this episode. [22:02] Live that truth and focus on that now. Your brain will focus on what you want it to. [23:34] Think about your approach to a project – what you focus on, the way you do things (or the way the company does things). [24:31] The problem that is facing you may not be as big of a deal as it seems – and something you aren’t even aware of could create a much bigger impact if you took the time to look for it. [25:36] A story about a detergent company fixing an obvious pain point and communicating it in their advertising. [26:32] Find the one or two points of value and talk about those…all the other features and benefits are extra. [27:12] Focus on that one thing and make it incredibly clear to your target market. [28:12] The mindstate guides the focusing effect and what the subconscious is looking for. Narrowing your messaging makes it more likely to resonate because it aligns with the brain of your customer. The BE Thoughtful Revolution membership group is live! Use the code LAUNCH to lock in your rate and save 60% (ends March 1, 2020). Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram 88. Marketing to Mindstates: A Discussion With Author, Will Leach Mountain Clarity Would You Be Happier If You Were Richer?  A Focusing Illusion Does Living in California Make People Happy? A Focusing Illusion in Judgments of Life Satisfaction 68. Counterfactual Thinking: Why We ‘What If’ And ‘If Only’ (A Behavioral Economics Foundations Episode) 71. Prefactual Thinking: How to Turn “What If” Into “Why Not” – Behavioral Economics Foundations 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 83. How to Organize Your Brain with Behavioral Economics 87. Social Proof: How to Use Herding to Boost Engagement and Sales Thinking, Fast and Slow (note this is on page 82) 76. The Brainy Benefits of Gratitude

Companies are getting more savvy about using behavioral economics not only to sell products, but to help consumers make better choices. Will Leach has taken the concepts of behavioral economics and social sciences to the next level with his book Marketing to Mindstates: The Practical Guide to Applying Behavior Design to Research and Marketing. I am very excited to talk with him today. He is the founder of the behavioral consultancy TriggerPoint. Previous to starting his business, Will led behavioral science methods at PepsiCo, and he has won numerous awards for his innovative work in behavioral economics. When reading Will’s book, I knew within the first few pages that he needed to come on the podcast. This is even before I realized that he got his master’s from Texas A&M University (I talked about the Texas A&M Human Behavior Lab in episode 33 where I interviewed Dr. Marco Palma.) Will and I had a lot of fun talking about the lab and team down there before we jumped into the interview. Will was at A&M before the lab was built, but we have both seen it in person thanks to Dr. Palma.  Will does such a great job of breaking down a really complex area of marketing into a formula that any business can follow – from global corporations like PepsiCo to small businesses. One area I know non-marketers (and even many marketing teams to be honest) struggle with is determining their target market and really narrowing it down and then knowing how to properly communicate with them. Will and I talk about his and the concept of the 18 different mindstates and nine motivations. He also shares his step by step process to help you determine which is the best for your company. This is an innovative and mind opening interview. Show Notes: [03:46] For Will, behavioral economics was the classic “I didn't know it existed until I stumbled upon it.” [03:56] Will joined the military right out of high school. He then studied classical economics. [04:16] He discovered marketing research through a graduate program and fell in love with it. It wasn't just looking at economics, it was looking at why people do what they do. [04:39] While working at PepsiCo, he discovered behavioral economics and behavioral science. In 2009, PepsiCo invested $20 million in a laboratory to study the neurological impacts of messaging. [05:08] Will was lucky enough to get to run behavioral science experiments, and he loved it so much he started his own business and wrote a book about it. [05:55] His favorite project was working on a brand new snack. It was a healthy baked hummus chip. The brand called Wicked Crisps was designed using purely behavioral sciences. The target market was the owner's daughter (or millennial moms). Will helped design the name, logo, tagline, bag, and website. Behavioral science was behind everything that they designed from fonts to benefits. [11:58] Will studied economics. He didn't want to just talk about theory. He wanted a practical book.  [13:02] He conveys specific models through story.  [14:01] He also dug into motivational psychology and goal theory. He looked at all six social sciences and found patterns. [16:25] Will thinks of mindstates as moments in time when we are being influenced. We aren't always consistent with our beliefs and attitudes. Our environment changes us. [18:20] His book is about moments in time and why a certain archetype may behave outside of the norm for them. Applying mindstates can help understand beliefs and values and impacts of the environment on these moments.  [20:57] Companies now look at how to help customers make better choices. Making their whole life better gives the company permission to sell them more. Brands are getting smarting and taking a holistic approach. [24:46] Will is the most excited about the idea of getting the mindstates out for everyone to use. They want to get more and more people to understand that there is science behind our decisions. There are also emotions around our decisions and just understanding a few small rules is a huge benefit. [25:57] We can sell more with behavioral economics. We can also reduce anxiety levels and create a better society.  [26:30] Will is getting more excited about the education side and using these concepts to help understand and overcome biases. [27:02] He uses goal theory to help understand what people are trying to accomplish. Helping people reach their goals can create a better society. [29:39] The nine motivations are achievement, autonomy, belonging, competence, empowerment, engagement, esteem, nurturance, and security. Then find optimistic and cautious examples. [30:28]  When guys are asked why they want to lose weight and get healthy the answer is usually so they can walk their daughter down the wedding aisle. [31:20] One reason why a dad would want to do this is nurturance. So a goal is “walk my daughter down the aisle” and the motivation is “nurturance.” [32:09] Promotion (or using an optimistic lens) is seeking to maximize losing weight. It's about maximizing gains. [32:45] A prevention lens focuses on eliminating doing bad things. [33:10] These details matter when you frame your benefits. They are either using cautious nurturance or maximizing nurturance.  [36:36] Be clear and stand for one thing. Take a stand and own it, and you will benefit tremendously. [38:33] The Hero and the Outlaw does a good law job of outlining archetypes. The BE Thoughtful Revolution membership group is live! Use the code LAUNCH to lock in your rate and save 60% (ends March 1, 2020). Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram Marketing to Mindstates: The Practical Guide to Applying Behavior Design to Research and Marketing 33. Inside the Texas A&M Human Behavior Lab 43. A Guide for You to Create a Brainy Brand 61. Color Theory: When It Comes To Color, This 1 Thing Matters More Than Anything Else 78. How to Become Indistractible, Interview With Author Nir Eyal 75. The Littery – Interview with CEO Michael Manniche 16. Framing: How You Say Things Matter More Than What You’re Saying: A Behavioral Economics Foundations Episode 86. Peloton: A Behavioral Economics Analysis StoryBrand The Hero and the Outlaw: Building Extraordinary Brands Through the Power of Archetypes @Trigger_pointer on Twitter Marketing to Mindstates on Facebook Marketing to Mindstates on Instagram William Leach on LinkedIn Marketing to Mindstates on Twitter TriggerPoint Will Leach BE Thoughtful Revolution Membership Group Wicked Crisps The Seven Basic Plots: Why We Tell Stories E. Tory Higgins

Social proof was introduced by Robert Cialdini in his book Influence. It’s one of the six principles of persuasion (accompanied by reciprocity, scarcity, authority, consistency, and liking). I talked about social proof in last week's episode on Peloton. I talked about the infamous ad that made Peloton have a dramatic drop in market value, but I also talked about all of the things they were doing right and how they were using availability, priming, stacking and bundling offers, money back guarantees, reciprocity, choice architecture, herding and…of course…social proof.  I’ve heard from many of you who are actually considering getting a Peloton after that episode. That wasn’t my intention, but something I love to hear because we have been so happy with ours (and it is an example of the third type of social proof - users). Herding and social proof are closely related. When social proof is present, we are more likely to herd. We also look for social proof because it helps us validate our decisions. I’ll talk about the six types of social proof which are expert, celebrity, user, wisdom of the crowd, wisdom of friends, and certification. I’ll show how our biased brains are susceptible to social proof, ways it shows up, and how easily it can be implemented in any business – and why it is important to incorporate it. Show Notes: [02:28] Social proof is closely related to herding. [02:39] The concept of social proof was first introduced by Robert Cialdini. Cialdini’s 1984 book Influence: The Psychology of Persuasion introduced the concept of social proof as one of the six principles of persuasion (the others are reciprocity, scarcity, authority, consistency and liking). [03:34] Social proof and herding feels a bit like a chicken and the egg situation. We are a herding species, we look for social proof to validate our decisions and be accepted by the group, but when social proof is present…we are more likely to herd. Which came first? [04:31] Having a lot of other people (or the right people) who have made the same choice in the past (regardless of whether or not it is a good one) is the social proof we need to nudge us into making the same choice. [05:01] You may be using social proof in your business or have seen it used in other businesses. Now you have scientific proof that these methods work. [05:19] The six types of social proof are: expert, celebrity, user, wisdom of the crowd, wisdom of friends, and certification. [05:52] Expert social proof would be when someone who is an expert in the industry recommends or speaks on behalf of a product or service. An expert extends a halo effect to the organization who brought them there. [06:37] Be aware of authority bias. People are conditioned to believe those who are in authority. [07:55] In your business, consider who an expert is on a topic, and how you might be able to bring them in to interact with your audience. [08:35] Experts lend credibility and the value of social proof to a brand – they make people feel comfortable about working with you. [08:59] Celebrity: There is a clear value in having a celebrity talk about your product. [10:01] You need to reach the right people in a way that will encourage them to take action. [11:12] Microinfluencers can impact your business by reaching the people who are likely to buy. [11:50] Just because a celebrity is easy to get, doesn’t’ mean they are a good fit for you or your brand. It is important to be discerning and make sure there is alignment. [12:08] The perceived personality of the celebrity carries over onto the perceived personality of the brand. [12:45] Have a user talk about your product. You could also stack this with a celebrity who used your product. [13:16] Incorporating users includes reviews and testimonials. [13:30] People are more likely to be influenced by those who they consider to be like themselves. This is the herding piece in action, along with our personal biases toward our own in-group. [15:25] Cialdini's towel example shows how incredibly powerful social proof can be. [15:46] A genuine user talking about the product is influential. When you can help people to see that others like them have found value from your business, it is a win. [16:42] I find key moments to mention that I have clients and people do work with me. It helps people to see that others like them work with me. [18:26] For testimonials: you do not need to write out the complete testimonial OR put the name of the person who provided it. [21:51] Understand why you are using the testimonial and why it matters to the person making the decision, and only use the important pieces. [24:16] Wisdom of the crowd is when someone follows you on Twitter and you look at their profile and decide whether to follow back based on the number of followers they have. [25:24] If you have a lot of past customers or clients, or downloads of a podcast, or subscribers to your YouTube channel or whatever it is…that is worth sharing. Showing those numbers (even off to the side) will be noticed. [27:20] Having a Starbucks “on every corner” is a version of social proof as well – “it must be popular if there are so many”. [28:33] Wisdom of your friends, when someone is closely affiliated – someone you actually know like and trust, their opinion goes further. [28:51] One really easy thing to do is to do Facebook ads to friends of people who like your page already – then when the potential liker sees the ad it will say something like “Melina Palmer and 4 other friends like this page” which will make that person more likely to consider liking the page too. [31:13] Another way to trigger the wisdom of friends is by asking people to share photos of themselves using your product. [31:45] Certification is someone else with credibility giving you their stamp of approval.  This form of social proof helps people to feel comfortable with making a decision because it shows someone else did a considerable amount of due diligence. [33:02] Earned media is when you or your business gets featured on the news or a local magazine. [33:44] Being on a show like Shark Tank raises awareness even if they don't get a deal. [34:58] Showing that other people have already been there and liked that is really valuable in getting more customers for your business. Sprinkle these in all over your messaging. [36:21] There are so many ways to incorporate social proof into your business. It's possible to overdo it, but you would really have to say it a lot. Remember your customers brains are busy so you need to put it out there several times. The BE Thoughtful Revolution membership group is live! Use the code LAUNCH to lock in your rate and save 60% (limit 50). Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram 86. Peloton: A Behavioral Economics Analysis 83. How to Organize Your Brain with Behavioral Economics 19. Herding: Come On And Listen…Everyone Else Is Doing It: A Behavioral Economics Foundations Episode 23. Reciprocity: Give A Little, Get A Lot: A Behavioral Economics Foundations Episode Principles of Persuasion The Psychology of Marketing: 18 Ways to Use Social Proof to Boost Your Results The Open Psychology Journal 45. Overview of Personal Biases 18. Priming: Why You Should Never Have A Difficult Conversation With Someone Holding An Iced Coffee: A Behavioral Economics Foundations Episode 6. How To Sell From The Stage 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 14. Scarcity: Why We Think Less Available Means More Value: A Behavioral Economics Foundations Episode Here's How to Send a LinkedIn Connection Request to Someone You Haven't Met Before Without Sounding Like Spam 20 Examples of Social Proof in Action in 2020

Last year on the show, there were behavioral economics analyses of Apple Card, Costco and Starbucks and this is the first time in 2020 we will be digging into a specific company. I’ll talk about the infamous Peloton ad that made the company’s market value drop $1.5 billion in three days: what happened in the ad and why it went wrong. Then I’ll explain what could have been done better and the behavioral economics concepts that back it up. I also talk about my own personal experience with Peloton. I recently got one and I’m loving it. You’ll learn about the behavioral economics of financing options, the 30 day money back guarantee, as well as how they use the concepts of social proof, herding, reciprocity, and more in very smart ways. If you don’t have a Peloton, you’ll learn a little more about equipment, subscription, and app options. I also talk about some of the really cool things they are doing that align well with behavioral economics – including sharing a bunch of concepts I see in their set up, and we will wrap up with tips for your business based on successes from Peloton.  As a note, I don’t do any work with Peloton and don’t know if they are working with anyone in behavioral economics or if they are familiar with any of these concepts or doing any of this intentionally. The stuff I talk about in this episode are my own thoughts and observations, not from any conversations I have had with anyone at Peloton. If you work there or know someone who does that would like to Connect, please email Melina@TheBrainyBusiness.com  Show Notes: [03:28] Peloton is a fitness company that sells equipment and features live streaming videos on a screen attached to the equipment. [03:52] According to Peloton’s website, there now have more than 1.6 million members. They state over 55 million workouts completed in 2019, and in their last fiscal year (which ended in June 2019) the company made $915 million dollars. [04:21] They also have a 94% 12-month retention rate. [04:48] Over the Christmas holidays, they featured an ad about a woman who receives a Peloton from her husband as a gift. We then get to watch her video blog of her entire year riding the bike and she says she didn't realize how much it would change her. [05:38] The internet hated this commercial. There was all kinds of backlash about the husband giving her an exercise bike and how it was sexist. It had negative coverage in all the publications. [06:10] According to Business Insider, Peloton lost 1.5 billion dollars in three days after the release of the ad. [06:33] In my opinion, the ad wasn't as bad as it was made out to be on social media. The real problem is mixed messaging (something many companies struggle with). [07:03] The ads that Peloton makes are clearly directed towards wealthy people. They also only have very fit people in their ads (which is fine if this is a clearly defined niche). [07:34] The other side of their brand is being a community opportunity for everyone to be able to have access to amazing fitness regardless of whether you have access (or time to go) to a gym. [07:49] If you say you are for everyone – a community of all kinds of people coming together to support each other…the ads should reflect that. [08:03] If you are truly only for wealthy people, you should say that. [08:27] There is no reason that any business can’t target a high income or high net worth group of individuals. Just make sure that the messaging is clear. [09:15] I think they do want to be inclusive – especially after having the bike for a month now. Their website is “One Peloton” and they share that messaging throughout all the workouts and interactions. They are very focused on their community. [09:24] my recommendations: First the ad needed a teeny tiny back story where everyone knew that the wife actually wanted a Peloton. [10:04] You cannot assume everyone who watches your ad or sees your message is coming from the same place as you. [10:32] When you don’t provide the proper context in the backstory, people will fill it in with their own story, which could be loaded with negatives (especially when you’re talking about health, diet and fitness). [10:45] Take a step back and look at your message from many perspectives and look for what people would disagree with. [11:17] A noticeable difference in the protagonist from the beginning to the end would have made a big difference.  [12:42] If you are going with the inclusive message, it should have closed with a very quick line like “One of the many stories of Peloton” which could then trim down to say “One Peloton”. [14:22] Peloton has enough content for a ton of advertising if they take the time to find it within their community. [14:46] Understand your market niche and who you are speaking to. When this is grey you can get into trouble. [14:54] Bring people along with you in your story, you can’t assume they know the right context. It is important to share key elements to ensure the right message is being conveyed. [15:19] Don’t overlook your community when creating ads and messages. You have a huge amount of people who love you and your brand and would be honored to be featured while singing your praises. Ask for stories. [15:45] Even though Peloton went down 1.5 billion in value it doesn't mean that will last forever. [16:18] Even though it wasn't the greatest way to go viral more people probably know about Peloton now. [16:34] Availability bias is when you start to see something everywhere and then it gets more weight in the brain. [18:06] The availability bias and the ad being everywhere pushed Peloton through the subconscious filter and got you to consider it. [18:50] One of the reasons it was easy to join Peloton was in the framing of the offer. Their equipment is expensive, but they have a 30 day trial with a money back guarantee and a 0% financing option where you can pay for the equipment over three years. [19:37] They have a 94% stay rate from people after 12 months, so their main hurdle is to get that bike or treadmill into your home. [20:22] You can be part of the community by paying a monthly membership fee to access the content. [21:14] There isn't a discount for people who bought the bigger thing (equipment) from Peloton - they actually pay more each month. [21:39] It's important to note that you don't have to discount when you bundle things together or have repeat customers. [23:11] The access to content, free trial and 0% financing are all examples of reciprocity. You pay each month to have access, but there is so much value it feels like a gift to have these great instructors, stats and details. [24:11] Choice architecture (specifically structuring complex choices) is in play with over 20 new classes going live daily and more than 10,000 already on demand. [25:02] You can easily search and filter for what you're looking for based on what matters to use such as type of class or instructor. [26:26] Sometimes it's good that people have to search a little to get to what they're looking for (the subconscious is always scanning). [29:56] Peloton uses concepts of herding and social proof to really enhance the community experience. You get all the goodness of being a part of a community without any of the awkwardness. [32:40] The instructors walk you through what numbers to focus on (in their case “resistance and cadence”) and there is an overall output that ranks you on the leaderboard. Limiting the areas of focus is a framing benefit. [34:37] Social proof is kind of like herding, in that it shows other people are there and liking the course. With Peloton, they do a FANTASTIC job of incorporating social proof and making you feel like part of a gigantic community. [37:20] They shout out milestones throughout the class, starting high and working their way down. This helps with anchoring, another important concept for Peloton. [38:25] Anchors are set in tandem with the social proof by announcing those in the live class who hit milestones. When they shout you out, they say, “I see you”. [40:07] Another way they use anchoring is in tandem with commitments and precommitments – which help form good habits. [41:34] These anchors help boost the amount you might have worked out otherwise, and committing in advance makes you much more likely to form a habit and reach a goal. [42:16] Peloton wants and needs people to change their behavior; to use the app and equipment consistently so they continue to find value and pay the subscriptions. [43:58] These little nudges make a big difference and help to show why Peloton is a smart company making (mostly) good choices. [45:07] If you have a peloton and want to connect there, please follow me – as I said, my name is “BEthoughtful” all as one word…so it shouldn’t be too hard to find me. I look forward to seeing you there. [45:30] SUMMARY OF TIPS: Know who you are speaking to and make sure your branding is aligned with that target market. Narrowing your focus is good and will help you better align with your right people. [45:34] Context is important in any story you are trying to tell. You can’t assume people know the story or have the same background as you have when you came up with the story. Take the time to understand which details are important and show them in the right order. [46:00] Use the stories from your community. [46:17] It’s ok to have complex offerings with a lot of choices, but you need to make the structure of those really easy for people who are using your product or service. [47:11] Anchoring is always important. Start with big numbers to help others see what is possible and set your anchors. [47:29] Social proof – saying things like “I see you” and helping people feel  there is a bigger community present is critical for an online space if you want people to feel connected. [48:18] Giving things away can trigger reciprocity and make people want to get more from you. [48:30] It's ok to not have discounts for people who are buying other stuff from your company. The BE Thoughtful Revolution membership group is live! Use the code LAUNCH to lock in your rate and save 60% (limit 50). Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: Melina@TheBrainyBusiness.com 73. Starbucks: A Behavioral Economics Analysis 47. A Behavioral Economics Analysis of Costco 42. Apple Card: A Behavioral Economics Analysis The real lesson your credit union should learn from Peloton’s ad flop (it’s not what you think) The Gift That Gives Back | Peloton Bike Commercial Peloton Investor Relations Peloton's nightmare before Christmas: $1.5 billion vanished from its market value in 3 days amid holiday ad backlash 15: Availability: Why People Are More Likely To Get Flood Insurance Right After a Flood: A Behavioral Economics Foundations Episode 16. Framing: How You Say Things Matter More Than What You’re Saying: A Behavioral Economics Foundations Episode 84. How to Stack and Bundle Products and Services So They Are Most Appealing to Potential Customers 77. How to Raise Your Prices 23. Reciprocity: Give A Little, Get A Lot: A Behavioral Economics Foundations Episode 41. Structuring Complex Choices: The “S” in NUDGES: A Behavioral Economics Foundations Episode 19. Herding: Come On And Listen…Everyone Else Is Doing It: A Behavioral Economics Foundations Episode 11. Anchoring & Adjustment: The 1 Word That Increased Sales 38%: A Behavioral Economics Foundations Episode 21. Habits: 95% Of Decisions Are Habitual – Which Side Is Your Business On?: A Behavioral Economics Foundations Episode 67. How to Get (and Stay) Motivated The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram  

As students of behavioral economics know even when we are aware of our biases, they still exist. Our brains and subconscious act on autopilot and incorporate biases into our decision making process without us even realizing it. If that’s the case, how can we make our decisions more rational? Improving our awareness of these biases can help us at least understand how we are being influenced. From there, we can determine opportunities to step back and take a second look at the information at hand.  Behavioral economics is a broad subject with a lot of variations of biases and principles. Fortunately, BrainyTab is a tool to help learn about and reinforce some of those biases. I’m excited to have Radu and Raluca Judele on the show today to discuss BrainyTab. Radu and Raluca wanted to create a tool to shine a light on those cognitive biases. They started researching and came up with a browser extension called MyCognitiveBias which has now evolved into BrainyTab. I couldn’t resist learning more about a tool set up to share behavioral economics with the world. That’s why Radu and Raluca are here today to introduce the extension to you and talk about why they came up with it, how it has helped them, and why it can help you. It’s free for everyone, and you can download it from their website. The tabs introduce about 530 concepts, and they are constantly adding new material including relatable, real-life examples. They also have a fun contest where users can get a chance to win $100 worth of books from Amazon.  Show Notes: [03:32] Radu was nervous to reach out to The Brainy Business (I’m so glad he did!) He and Raluca wanted to work on a project together. BrainyTab is phase 2. Phase 1 was an extension called MyCognitiveBias which was inspired by the cognitive bias codex.  [04:38] A browser extension seemed like a reasonable way to remind users of cognitive bias. [04:51] Raluca did the research. They built the extension together.  [05:11] They started thinking about things that were connected to cognitive biases that could improve decision-making. The next step was adding Mental Models. The also thought people should be more aware of Dark Patterns.  [06:21] They have received tons of positive feedback. They are focused on growth and what steps to take next. [08:01] They were hoping for 100 users for MyCognitiveBias, but ended up with 3000.  [09:04] BrainyTab teaches you a new tidbit each time you open a new browser tab, it will show a random cognitive bias, mental model, or dark pattern. If you like to reinforce one concept over and over (instead of a new one each time) that is an option as well. It also has a bookmark manager. [11:13] Melina had access to the beta version.  [12:33] Repetition and loss aversion are some of their favorite principles. We are aware of our bias, yet the reminder helps.  [14:01] BrainyTab helps bring awareness to things that exist and identify why our brains are doing something.  [17:31] Radu is a marketer, and he has worked in hospitality. As an observer of people he noticed patterns. When he started marketing, he became aware of behavioral economics.  [19:17] Raluca had a mini-stroke about 18 months ago. It was stress related and a game-changer for her. She now enjoys her research and what she is doing. In many ways, working on BrainyTab helped retrain her brain and reduce stress. [21:09] Understanding the patterns helps her control stress and emotions.  [24:42] They have around 530 concepts on their tabs. They want to make the information relatable and add real-life examples.  [27:31] We aren't as rational as we would like to be. Setting a goal ahead of time and removing emotion such as selling a stock at a certain number is a mental model.  [29:21] It's Melina's mission to help as many people as possible understand how our brains work and how that applies to our lives. BrainyTab is such an obvious connection point. Melina is excited to help build out the content and sources for BrainyTab (Radu and Raluca are not behavioral economists) to make it more robust).  [30:26] Radu and Raluca are having a contest to give free books to users.  The BE Thoughtful Revolution membership group is live, and we are digging into live weekly calls in the Brainy Mindset Course next week! Use the code LAUNCH to lock in your rate and save 60% (limit 50). Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Links and Resources: BrainyTab BrainyTab on Twitter Radu Judele on Twitter Episode 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode Episode 45. Overview of Personal Biases Episode 60. Surprise and Delight Episode 61. Color Theory: When It Comes To Color, This 1 Thing Matters More Than Anything Else Episode 68. Counterfactual Thinking: Why We ‘What If’ And ‘If Only’ (A Behavioral Economics Foundations Episode) Episode 80. Celebrate! It’s More Important Than You Think Cognitive Bias Cheat Sheet The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram BE Thoughtful Revolution Membership Use code LAUNCH to save $60 a month (limit 50). The Brainy Mindset Course Use the code BRAINY50OFF to take $50 off your registration and join us to tackle mindset!

This show is all about how to stack products and services to make them the most appealing to your potential customers. Those of you who've heard me speak, have heard me talk about this before (especially in relation to The Truth About Pricing) and the concepts of anchoring, adjustment, and relativity. I share examples of how certain numbers can get stuck in our subconscious and in comparison to the real price, we feel that we are getting a bargain.  I also talk about how infomercials use several combined behavioral economics techniques in their presentations. To show how I practice what I preach, you’ll learn about the pricing strategies for the new BE Thoughtful Revolution Membership group. I also give you an actionable example of how you can increase your prices by 10% and feel great about it. As always, this episode is packed with real world information and examples that correlate with behavioral principles you can use in your life and business.   I've had listeners asking about a membership group for a while now, and the BE Thoughtful Revolution Membership Group is now open. I’m so excited about this membership and all of the benefits it has to offer.  Members get direct access to me for all of your behavioral economics questions in our dedicated Facebook Community. This is where I'll be doing live Q&As, training, and all sorts of other stuff.   You’ll also get access to The Brainy Courses. The Brainy Mindset Course and Brainy Pricing Course are $399 each. (That’s a combined value of $800.) You’ll also get exclusive content from The Brainy Business, and members get special discounts on workshops, products, and strategy sessions and will be the first to know when new stuff is coming out. The membership is $99 a month, but the first 50 people to sign up with code LAUNCH get 60% off and will only pay $39 a month. Lock in that price before it’s gone! CLICK HERE FOR YOUR FREE DOWNLOAD Show Notes: [05:36] Stacking and bundling products and services. Anchoring, adjustment, and relativity are the real concepts at play in this process. [06:43] Anchoring and adjustment is about our brains being swayed by numbers. [07:11] The Snickers study I share all the time is part of this concept of anchoring.  [07:28] The brain latches onto the number and will move up or down from there. [08:15] When an item is limited, people will actually buy more. This is all because of anchoring, and even unrelated numbers can have an impact on this. [09:03] If you throw in a larger number in your description, it makes the price seem smaller. [09:43] The brain kind of glosses over what it hears at any given time because there is a lot going on, but it hears a number and latches onto it for a while. [10:01] Think of these concepts in examples of infomercials. Your brain likely didn’t have any preset number for what it thought that random item was worth or what you would pay for it. [12:26] If you ever discount something, or offer a special, make sure you talk about the higher number first. [12:47] When I introduced the group, I talked about the benefits to you first, like “people have been asking for it” which is a combination of herding and priming. [13:08] I mentioned you would get access to the Brainy Mindset Course and Brainy Pricing Course, which are both $399 for a combined value of $800. [14:01] After sharing the value just in the courses being at $800, I shared the regular rate of the group, which is just 99 a month. And THEN I said that the first 50 people could use a code to claim their spot at only $39 a month. (That order was intentional, and it matters) [14:38] You need to spell it out to people in the right order - and know that saying things are “priceless” doesn’t help your anchoring case. [15:21] Instead of saying something is priceless, find a way to quantify that value. [16:09] Relativity is where the second number feels lower or higher based on how it compares relative to the first number. [17:16] The way numbers are shared via framing, relativity and anchoring make all the difference in how the customer reacts.  [17:36] When you have multiple options available and want to showcase one of them. You don't want to show the least expensive thing first and work your way up. Always start big and work your way down. [18:36] Find the best product that you want to sell and has the most value for clients. Create a high anchor to present before that. Add 10% to the amount that you're going to charge. [25:17] You could also create a totally different third product. You don't have to though. [26:29] You can use the third option when you are selling physical objects like sofas.  [28:18] This can make the best option seem like the obvious best choice. It helps customers to feel good about the investment.  [29:29] The context and relativity all matters and makes a difference. It takes a little work on the front end to make sure you are presenting the options in the right order to help the customer make their best choice. [30:38] Bundles are great tools and can be oh so useful. Often, bundles are provided with a discount and that is prônant where your mind goes first, but it isn’t required. [31:29] If you make it easy for a customer to find everything they need with one or two clicks, you can charge a premium for that.  Convenience has value. [33:47] “We offer three courses, the first one is $500 and it is on XYZ, there is also a $600 course on ABC and an $800 course on being awesome. Which would you like to start with?” In that case, you are leading them to the $500 course, because it became the anchor. [36:26] If you want the bundle to be the best choice and a clear best offer, you can have a discount included. Start by defining the main thing and build everything around making that look as good as possible. [36:55] The way you talk about it, the framing, shifts based on what you want to showcase and what most people should pick. [37:52] You can build your offering to be anything you want it to be and if you understand the value and can properly communicate it, you will find people to buy what you are selling. Thanks for listening. Don’t forget to subscribe on Apple Podcasts or Android. If you like what you heard, please leave a review on iTunes and share what you liked about the show.  Join the BE Thoughtful Revolution Membership today! Use code LAUNCH to save $60 a month Links and Resources: 83. How to Organize Your Brain with Behavioral Economics BE Thoughtful Revolution Membership Use code LAUNCH to save $60 a month.  5. The Truth About Pricing 11. Anchoring & Adjustment: The 1 Word That Increased Sales 38%: A Behavioral Economics Foundations Episode 12. Relativity: The Brain Can’t Value One-Off Items: A Behavioral Economics Foundations Episode 19. Herding: Come On And Listen…Everyone Else Is Doing It: A Behavioral Economics Foundations Episode 23. Reciprocity: Give A Little, Get A Lot: A Behavioral Economics Foundations Episode 14. Scarcity: Why We Think Less Available Means More Value: A Behavioral Economics Foundations Episode 9. Loss Aversion: Why Getting New Stuff Is Not The Same: A Behavioral Economics Foundations Episode 18. Priming: Why You Should Never Have A Difficult Conversation With Someone Holding An Iced Coffee: A Behavioral Economics Foundations Episode 16. Framing: How You Say Things Matter More Than What You’re Saying: A Behavioral Economics Foundations Episode Why You Should Overestimate the True Value of Your Products Mommy Income Master Your Mindset Free Mini-Course The Brainy Business on Facebook The Brainy Business on Twitter The Brainy Business on Instagram