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

We are getting near the end of our eight week series on all the biases. There is just one more to go after this one, which is about how our brains are biased toward novelty and stories. The first six episodes in the series, which are linked in the show notes, were on personal biases, how we are biased toward others (both individuals and groups), memory, present versus future, selective attention, and last week was all about how math is hard. Turns out we aren't so good with money, value, numbers, games and probabilities. So, why do we take shortcuts or accept something as a fact without actually doing the investigative work behind it? It all has to do with our lazy brain. The truth is we have the power to use our brains however we want. Learning some of the lazy brain biases will help us use our brain more efficiently in our life and our businesses - or at least help us understand the science behind some of our choices. Show Notes [04:58] The default effect, which was covered in episode 20 and again in episode 38 as part of the series on nudges. We humans are most likely to choose a default option when we are provided one, whether it is in our best interest or not. [05:39] Due to the decoy effect someone's preference for a choice or product will change based on the options that are presented. [08:05] We have an automation bias, which leads us to have an excessive dependence on automated systems, this can create a situation where those automated decisions override the choices of individuals that would be more correct and accurate. [08:43] There are lots of things automation can't do properly, so it is important to be thoughtful and take a look under the hood every now and then. [09:08] The law of the instrument, where we are overly reliant on a familiar tool. The old adage to explain this is, "If all you have is a hammer...everything looks like a nail." [09:26] Functional fixedness is where someone is limited to using an object only in the way it is traditionally designed or expected to be used. [09:49] Our businesses would be best served if we could look at a problem in a new way, from a new angle, and find a new approach. [10:49] A great example featuring the Apollo XIII story. [11:54] Our brains are looking for the easiest answer and solution most of the time, the way the information is presented – or the frame – can determine what actions we take. [12:44] When I talk about anchoring and pricing I always recommend to start with the highest price first. [13:00] The contrast effect makes it so different stimuli are viewed differently based on what was seen just before it. [14:12] Interoceptive bias is when we believe that input from our senses are used to influence our external decisions. [15:22] The ambiguity effect is when we avoid options and choices where we don't know the odds or likelihood of the outcome in advance, and we would rather choose an option with bad odds that we happen to know, than go down the unknown path. [15:55] Action bias is where we take an action to feel like we are in control of something. [17:38] There are two versions of illicit transference. The fallacy of composition is when you assume things about a group because of one person you have interacted with. The fallacy of division is where you determine each individual must be like the whole group. [20:59] When we are presented with tasks that are particularly daunting, we may become a victim of Parkinson's law of triviality, which is also known as bikeshedding. This is when trivial issues are given way too much weight and we can get stuck on the small stuff to avoid fixing the big stuff. [23:03] Lag effect is how we learn better if our studying is spread out over time instead of trying to cram it all in during one session. The levels of processing effect is where not all methods of putting information into our memory have the same level of effectiveness [24:07] The list length effect is where we can remember more items when given a longer list. Our brains are only as lazy as we allow them to be. [24:56] Take a limiting belief that you have and push the limits. 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: Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 48. An Overview of Memory Biases Episode 49. Present Versus Future Biases Episode 50. Selective Attention Biases Episode 52. Biases – Math is Hard Leave an Audio Review or Talk With Me Episode 20. Behavioral Economics Foundations: Defaults Episode 38. Behavioral Economics Foundations: The D in NUDGES – Defaults Episode 12. Behavioral Economics Foundations: Relativity Predictably Irrational Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment The Greatest Space Hack Ever This Is the Actual Hack That Saved the Astronauts of the Apollo XIII Apollo Expeditions to the Moon - A Square Peg in a Round Hole Episode 16. Behavioral Economics Foundations: Framing Episode 18. Behavioral Economics Foundations: Priming Action Bias Among Elite Soccer Goalkeepers: the Case of Penalty Kicks Action Bias and Environmental Decisions The Inaction Effect in the Psychology of Regret Episode 19. Behavioral Economics Foundations: Herding Episode 17. Unlocking the Power of Numbers Episode 5. The Truth About Pricing Episode 21. Behavioral Economics Foundations: Habits

Last week we got to finally have the episode on time discounting, which was very exciting for me because as many of you know, it is my all time favorite concept. As you learned in episode 51, I call it the "I'll Start Monday Effect" because it is the bias behind all the times we commit ourselves to do something in the future (like starting a new exercise program on Monday) and when we wake up…we feel like a completely different person and hit snooze. As you have heard me mention on the show many times before, our brains are lazy, and they like to take the path of least resistance to get to what they believe to be a "good enough" answer as quickly as possible. We will get into that in more detail next week, but today I want to talk about how that impacts our interactions with numbers and math. Most people think math is hard and our brains are particularly lazy when it comes to hard stuff, so we often risk being wrong rather than take the time to do the numbers. I dive deep in the fascinating whys and why nots of this phenomena. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:34] Our brains are lazy, and they like to take the path of least resistance to get to what they believe to be a "good enough" answer as quickly as possible. [05:54] Our brains make lots of assumptions based on the little bit of information they are looking at. This combines with our brain's natural tendency to believe everything it learns to be TRUE first and ask questions later. [06:27] Because we are particularly lazy when it comes to math, we rely on the source of whatever is thrown our way, and the brain would rather risk being wrong than to take the time to do the numbers in everyday interactions. [07:27] Because of unit bias, you may have assumed the amount you serve yourself matches the intended serving size. [09:00] Calories are the main comparison people make when thinking about cereal. Most people don't take the time to do the actual math involved in the serving size. [09:54] Due to the less is better effect, our preferences change when we evaluate things alone versus comparing them against others (this is relativity in action). [11:16] Great quote from Thinking Fast and Slow, (which was actually a quote from Paul Rozen, an expert in disgust) "a single cockroach will completely wreck the appeal of a bowl of cherries, but a cherry will do nothing at all for a bowl of cockroaches." [11:48] MONEY AND VALUE Due to the money illusion, we tend to concentrate on the nominal or face value of our money, instead of thinking of it in terms of how much it can get for us. [12:09] Due to the denomination effect we are more likely to spend money in smaller denominations than when it is in bigger ones. [12:53] We still do a lot of mental accounting. This is where we think money in different places or accounts is not all accessible in the same way. [13:33] Why is $1000 not the same everywhere? Consider all the ways this is good and bad. [14:37] Due to the IKEA effect (yes, that is its actual name) people will value things more that they made themselves or partially assembled. [15:13] The endowment effect is where we value things we own more than things we do not. [15:43] For your business, remember that making people feel like they came up with the idea makes them more likely to support it. [16:11] Due to the Zeigarnik effect we will remember the tasks we did not complete – or where we were interrupted – better than the tasks we did complete. [16:43] Due to the disposition effect we humans will tend to sell assets that have accumulated in value and hold onto those that have declined in value. [17:29] Because of our time saving bias, when going at a relatively low speed, we underestimate the amount of time we could save by speeding up or lose by slowing down. [18:14] Perspective can make a huge difference for good and bad. [18:40] Duration neglect. This likely combines with the IKEA effect where we forget the 8 hours it took to put together that simple bookshelf and just see the glorious thing we have created. [20:05] Well-traveled road effect. We underestimate how long it will take us to go on roads or routes we have taken a lot, and overestimate how long it will take to go on less familiar ones. [21:37] GAMES AND PROBABILITIES The hot hand fallacy. ​It's a myth that "hot hands" are going to continue to defy the odds. [22:18] The clustering illusion is where we see phantom patterns and overestimate the importance of small streaks. [22:40] This is a lot like the gambler's fallacy. This is where we think the past has any impact on the future probability. [23:50] We are biased toward having zero risk if we can. This is much like ambiguity aversion, or uncertainty aversion, people are more likely to prefer the things we know. [25:46] Neglected probability territory is when we are uncertain about the options or outcomes and need to make a decision we completely disregard everything we do know about probabilities. [26:12] Berkson's paradox is where someone will misinterpret statistical experiments when the probabilities are conditional. [27:11] Due to the subadditivity effect, we judge the probability of the whole to be less than the probability of its individual parts. [27:41] Insensitivity to sample size, which is where we don't properly anticipate the variation that will show up in small samples. [28:04] Weber Fechner Law which is when we find it difficult to compare and see small differences among large samples. [29:38] Melina shares a story from Thinking Fast and Slow. [33:31] Everything we know to be true is not necessarily true. We need to step back, flex, and relax. Try to take an objective look at your business processes. 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: Episode 51. Behavioral Economics Foundations: Time Discounting @atubanos on Twitter Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 16. Behavioral Economics Foundations: Framing Less Is Better: When Low-value Options Are Valued More Highly than High-value Options Episode 12. Behavioral Economics Foundations: Relativity Thinking Fast and Slow Episode 45. Overview of Personal Biases Episode 30. Booms and Busts The Disposition to Sell Winners Too Early and Ride Losers Too Long: Theory and Evidence Episode 49. Present Versus Future Biases Treatment Decisions Under Ambiguity Ambiguity and Nonparticipation: The Role of Regulation Risk, Ambiguity, and the Savage Axioms Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Statistics How To Episode 49. Present Versus Future Biases How to Feel Like You Have All the Time in the World (even If You Don't)

Today, we are getting back to our behavioral economics foundations episodes to discuss time discounting. I hope you enjoyed the last three episodes in our series on all the biases, where I told you about memory biases, our biases toward the future and how that impacts our decisions today, and how our selective attention and focus can color our decisions. Time discounting is one of my favorite concepts. I recently did a research project centered around the concept of time discounting and saving money, and there is a white paper about it coming out this summer. Time discounting is the basis behind a lot of the future versus present biases which I talk about in Episode 49. In this episode, we will learn all about time discounting and why I love it so much. I tell people to think of time discounting as the "I'll start Monday effect." In this episode, you'll learn why. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [07:30] Have you ever said you would start your diet, or exercise plan, or quit smoking, or be more organized or whatever it is… "on Monday"? [08:58] So, what happened? Why do you feel like a completely different person when the alarm goes off than the person who set the alarm the night before? [09:26] When we think about ourselves, a certain part of the brain lights up, and it does this differently when we are thinking about ourselves versus thinking about someone else. [10:05] For most of us (and especially for particularly impatient people) when we talk about our future self, the brain lights up as if it is talking about a completely different person! [10:34] It's easy to talk about our future selves doing something early in the morning, but when the alarm goes off it's actually us who is waking up. [11:08] We have a hard time judging what is best for us today from what is best for us tomorrow. [12:30] We aren't inherently good are bad at this...more like we are great at this in some situations but terrible at it in others. [12:54] When looking at this from your business perspective (and in understanding more about yourself…which we will talk about both later on in the episode) try to think about the concept in general and how it could apply to you, your peers and current or potential customers. [13:16] The term hyperbolic time discounting shows us that the way we discount is not consistent over time, and studies have found it does not occur at a rate that is constant or linear. [15:40] Our lazy brains (which is the topic of an upcoming bias episode) don't take the time to do all this logical thinking, and the subconscious wins out with its present-focused mentality. [16:10] Think of some of the ways that time discounting has affected you, because I'm sure it has come up in many ways. [17:14] Just because it is hardwired doesn't mean you can't change it. On the contrary, understanding how this concept works and how it is genetically conditioned in your brain allows you to set up a sort of brain hack so you can work WITH your brain to change and accomplish your goals. [19:46] If a client came to me with this problem (of helping employees save more for retirement), the first thing I would do is recommend we dig into the current plans. What are the offering, how do they present it to employees, when do they get it, what are the options, how difficult is it, etc. And then I would remind them that just because a plan has always been set up a certain way…doesn't mean it is the right way or that it has to stay that way. [21:35] One other question to consider when thinking about the power of time discounting is opting in versus opting out. Forcing people to choose more often and consciously think of what they are doing does not always encourage them to make better decisions. [23:11] It's easy for the brain to commit when it is in a cold state. [25:17] BRINGING TOMORROW TO TODAY One other way to make the future self of you and your customers to be more visible in the present, is to look at renderings. Consider how you could help someone make tomorrow more real today with the help of technology. [30:02] OTHER BUSINESS EXAMPLES I once worked for a company that changed the review process for managers so that every manager's ability to get their full raise potential was dependent upon having their reviews done in a timely manner. [32:43] ​I also used to encourage my employees to keep lists of all their accomplishments throughout the year and would reach out to them a month before their review to let me know what they were especially proud of. [33:30] ​I would also recommend for companies to not stack reviews so they are all needing to be completed at once. [37:37] ​Vagueness can produce inaction even when people are informed about risks and potential improvements. What can you provide to your staff to help them find the blood drive or voting booth or get their flu shot? [39:03] Making the experience real and actionable (you can picture that today even if your day/time is not for a week or so) makes it more real. This also activates mirror neurons. [40:12] Every customer who is not signed up for a recurring plan with you of some kind is having to take on some sort of action and give up their precious money to do business with you. [42:00] If you have people delaying to buy for whatever reason, think about why they are putting off the decision. [42:48] The brain wants the benefit now, so make it as easy as possible to say yes when they are on the fence. [43:27] The next example is a little taste of what I did in my research project with the credit union in Oregon. [44:25] Constant reminders of saving keep it on your brain. [45:24] One thing many of us do is set far too many goals for ourselves. Due to our optimism bias, we think we can do a lot more than we really can. One reason we have an optimism bias is because of time discounting. [47:13] If you only had one top priority to get done, you would be much more likely to accomplish it. [48:07] You can use loss aversion to motivate your clients by putting money in a jar if they keep their commitment, but if they don't they lose it all. This makes future consequences tangible today. [49:26] When you are looking for ways to apply the solution to time discounting, it doesn't have to be directly related to the thing that is causing the delay. [52:53] I want to help everyone realize their future dreams by taking the right actions today - how can we work to combat time discounting in your business? 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: Episode 48. An Overview of Memory Biases Episode 49. Present Versus Future Biases Episode 50. Selective Attention Biases Episode 19. Behavioral Economics Foundations: Herding Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Buffalo Seamery on Instagram Impulsivity and Cigarette Smoking: Delay Discounting in Current, Never, and Ex-smokers. Time Discounting and Time Preference: A Critical Review Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self Golden Eggs and Hyperbolic Discounting Initial Examination of Priming Tasks to Decrease Delay Discounting Unstuck in Time: Episodic Future Thinking Reduces Delay Discounting and Cigarette Smoking Simpler: The Future of Government by Cass Sunstein Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Nudge: Improving Decisions About Health, Wealth, and Happiness Implementation Intentions: Strong Effects of Simple Plans. Procrastination, Deadlines, and Performance: Self-Control by Precommitment The Power of Small Wins Episode 20. Behavioral Economics Foundations: Defaults Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Episode 19. Behavioral Economics Foundations: Herding Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving Episode 9. Behavioral Economics Foundations: Loss Aversion Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving Oldify - Age Your Face Change My {FACE} Human Behavior Lab About the Research Episode 36. Behavioral Economics Foundations: The N in NUDGES – iNcentives Episode 39. Behavioral Economics Foundations: The E in NUDGES – Expect Error Episode 31. Mirror Neurons Episode 34. Behavioral Economics Foundations: Optimism Bias

This has been an amazing month as I spoke at eight different events across the country on 6 different topics, from pricing to change management, why consumers are weird and how behavioral economics is the future of branding. I love speaking at events like this and want to welcome all of you who are joining the podcast after hearing me speak at one of those events. I had so much fun getting to know and interact with many of you, and want to thank you for listening. Welcome to The Brainy Business Family! What do I mean when I talk about "selective attention" biases? If you have been listening to the series so far, you know we have talked about how our brains are biased toward ourselves, the way we think about others, our memories, and past versus future. Today, we are going to dig into all those biases that have to do with how we focus our attention and how that can color our impression of the world around us. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [00:04:25] We are going to dig into all those biases that have to do with how we focus our attention and how that can color our impression of the world around us. [00:05:34] I have broken selective attention into three categories: where we focus our attention, how that impacts the decisions we make, and how it colors our perception when looking back. [00:05:54] The most common concept and one I am guessing you are very familiar with even if you don't know the name of it, is called the frequency illusion, selection bias or the Baader-Meinhof effect. This is where after something comes to our attention it seems to be everywhere. [00:07:30] The recency illusion which would be if I thought the phenomenon of the word "panacea" being everywhere is because it is a brand new word everyone has just started using (instead of a word that was recently introduced to me). [00:08:30] This is similar to availability, which was the focus of episode 15. We humans put more weight and importance on things we can recall easiest. [00:09:43] This can lead to the availability cascade, which is a self-reinforcing process where hearing and seeing something more and more makes it feel more and more true or real. [00:10:14] Once we become familiar with things or concepts, we are much more likely to like or believe them because of the mere exposure effect. [00:10:53] Selective perception is when our expectations impact the way we perceive things. For example, if you expect a sales call to go badly, it probably will. [00:11:53] This is very similar to attentional bias, which is when our perceptions are impacted by recurring thoughts and the focusing effect, which is when we place too much importance on one aspect of an event. [00:14:12] The Von Restorff effect, is where something that sticks out is more likely to be remembered than everything else. [00:16:09] Due to the rhyme as reason effect, we believe statements that rhyme to be more truthful than those that don't. [00:16:45] Due to the belief bias, we also base the logical strength of an entire argument on the believability of the conclusion. [00:17:26] We also tend to focus on specifics and think they are more likely to happen than general conditions because of conjunction fallacy. [00:18:39] Base rate fallacy or base rate neglect, where we tend to ignore generic or general information (also known as base rate information) to focus on more specific information that only pertains to a certain case. [00:20:13] Exaggerated expectation is where people tend to predict and expect more extreme outcomes than what actually happen. [00:20:46] DECISIONS MADE: Our brains get what they expect. Because of the Semmelweis reflex, people tend to reject new evidence that contradicts their perspective, paradigm, or expectation. [00:21:27] Experimenters or expectation bias is the tendency for someone to believe, certify, and publish data that aligns with what they expected to see. [00:22:46] Illusory correlation is when someone will inaccurately perceive a relationship between two unrelated events. [00:23:40] Subjective validation ​is where someone sees something as being true if their previous beliefs demand it to be true. [00:24:09] Biases can lead to the backfire effect or the continued influence effect, which is when someone will disconfirm evidence that is presented by strengthening their previous beliefs. We also suffer from confirmation bias, which is when we search for, interpret, remember or focus on information that confirms our preconceptions. [00:25:16] The size of the space being searched can cause the researcher to observe something statistically significant that actually wouldn't be if the parameters had been set correctly because of the look elsewhere effect. This is similar to congruencies bias, where someone will directly test their hypotheses instead of testing possible alternatives. [00:27:25] Information bias is when we keep seeking more and more information even when it can't affect our actions. Distinction bias is when you are comparing two things at once you are more likely to see what is different about them (than if you evaluate each on its own). [00:28:51] Due to hindsight bias or the "I knew it all along effect" we tend to see past events as being more predictable than they actually were. [00:29:22] Outcome bias is when we judge a decision based on the outcome instead of the quality of the decision. [00:29:57] The misinformation effect is where memories are less accurate because of information that comes about after the event is over. [00:30:20] Consistency bias is where you remember your past attitudes and behavior as in alignment with the way you think and feel now (even if you didn't feel that way at the time). 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: Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 48. An Overview of Memory Biases Episode 49. Present Versus Future Biases Episode 15: Behavioral Economics Foundations: Availability Judgment under Uncertainty: Heuristics and Biases Availability: A Heuristic for Judging Frequency and Probability OJ Simpson Murder Trial: "If It Doesn't Fit, You Must Acquit" Episode 19. Behavioral Economics Foundations: Herding Episode 30. Booms and Busts Thinking, Fast and Slow The Base-Rate Fallacy in Probability Judgments Episode 4. Questions or Answers Calendly Acuity Schedulicity

This episode is about present versus future biases. This is part 4 of our 8 part series about biases. We've already talked about personal biases, how we think about ourselves versus other people, and memories. When it comes to present versus future, people want their payoffs now, so humans tend to place a greater weight on the outcome that is closer to now. Other things that impact our decisions include losses and risks. We are impacted more by losses than gains. We are also biased towards maintaining the status quo. I talk about optimism bias and even pessimism bias. When you know the rules of the game, it can be easier than you think to trick your brain into doing more in your favor – whether it is making choices today that you will appreciate tomorrow, or helping to get yourself out of a negative spiral. This episode will help you understand why we tend to make decisions a certain way and enable you to make better decisions for your business and your life. Show Notes: [04:10] People want their payoffs as quickly as possible. We place greater weight on things that happen closer to now. [04:31] This is closely tied to time discounting (what I call the "I'll start Monday effect"). [04:39] We tend to make decisions today that our future self may not be as happy about. [05:39] Due to diversification or projection bias, we may think our future self will want more variety than we really want or will use. [06:07] You think you'll want options that are more virtuous - could be related to optimism bias. [07:14] Due to impact bias, we overestimate the duration of intensity of the impact of how we will feel in the future. [07:50] We are also victim to projection bias, which means we overestimate how much our future self will share the preferences we have today. [08:34] Reactance is the urge to rebel and do the opposite of what someone wants you to do to hold on to some form of control and power. [10:44] Irrational escalation – also known as the sunk cost fallacy – where people will keep spending and justify pouring money into a bad prior investment even though evidence shows it is bad. [12:43] As your brain gets overwhelmed your subconscious is more likely to take the reigns, meaning you will make more battery and present-focused decisions. [13:47] The hot-cold empathy gap finds that in a cold state it's much easier to make better decisions then in a hot state or in the moment. [16:01] The reverse is the cold-hot empathy gap where smokers underestimated their cravings to smoke when they were in a cold state. [17:26] People are impacted more by losses than gains – and it takes double the joy felt by a gain to equal the pain felt by a loss. [17:52] Dread aversion – dread results in double the emotional impact of savoring. [20:11] We tend to beef up the status quo and defend it more than may be warranted because of system justification. [20:33] Due to normalcy bias and not wanting to think about change, we may refuse to plan for or have the proper reaction to a disaster which has never happened before. [21:35] Due to a zero risk bias, we will prefer to reduce a small risk down to nothing than taking a bigger reduction in a larger risk. [22:47] Because of risk compensation or the Peltzman effect, we are more likely to take a greater risk when our perceived safety increases. [24:26] Because of the pseudocertainty effect we are more likely to make choices that avoid risk if the expected outcome is a good one, but seek out risk in an attempt to avoid a negative outcome. Which could lead to the ostrich effect or ignoring a negative situation. [26:06] A predisposition toward viewing the past in a positive way and the future in a negative way is called declinism. [26:21] The pessimism bias is to overestimate the likelihood of negative things happening to us in the future. [26:42] A zero sum bias is where you think that the only way one person gains is at the expense of another. [27:05] Look for the win win. For one person to succeed, it doesn't mean that another person has to fail. [27:25] Negativity bias is when it's easier for us to remember negative memories over positive memories. The worse than average effect is where we believe that we are worse at tasks than average people are. [29:06] Acting like a confident, optimistic person can create the benefits as if you are confident and optimistic. [29:44] When you know the rules of the game, it can be easier than you think to trick your brain into doing more in your favor and using these biases as your advantage. 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: Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 48. An Overview of Memory Biases @wagsRJ Robert Parlange on Twitter Magic of Self Direction by David S. Schwartz @BusinessBrosPod on Twitter Rich Dad, Poor Dad by Robert Kiyosaki A More Beautiful Question by Warren Berger Fierce Conversations by Susan Scott @thebrainybiz on Twitter Diversification Bias: Explaining the Discrepancy in Variety Seeking Between Combined and Separated Choices Mixing Virtue and Vice: Combining the Immediacy Effect and the Diversification Heuristic Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Research on How Self-control Works Could Help You Stick With New Year's Resolutions Free Will in Consumer Behavior: Self-control, Ego Depletion, and Choice A Multilab Preregistered Replication of the Ego-Depletion Effect Hot–Cold Empathy Gaps and Medical Decision Making Exploring the Cold-to-Hot Empathy Gap in Smokers Episode 9. Behavioral Economics Foundations: Loss Aversion The Endowment Effect Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias Behavioral Economics Foundations: Optimism Bias Experimental Tests of the Endowment Effect and the Coase Theorem Does Market Experience Eliminate Market Anomalies? The Case of Exogenous Market Experience

This behavioral economics podcast episode is about memories. Specifically, it will be an overview of memory biases Last week, we took a little break from our series on "all the biases" for a behavioral economics analysis of Costco. Today, we dig into memory. This topic will be divided into three sections. The first section is general memory stuff, then we will talk about false memories and wrap it up with some tips on how you can use these biases to help you remember things better! When we think about our brains and all the amazing things they do, much of what we are accessing are memories. This episode breaks it all down with some fun facts and cool tips about our memories that a lot of you may not know. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes: [03:59] When we think about our brains and all the amazing things they do, much of what we are accessing are memories. [04:21] Most people think of our brains like a filing cabinet, but that's not how it works. [04:36] Our memories are basically inaccurate renditions our brains tell us...and every time we access them, we change them a little. [04:49] The more we think about something the less likely it is to be accurate. This is partially because of two biases called leveling and sharpening. [05:00] Memories can be distorted over time when details are lost. In this process, there may be selective recollection (where you only remember, sharpen and exaggerate certain portions of the memory). Or, it can be leveled out to fit some other biases that exist and just get a little dulled over time. Both of these are constantly reinforcing each other over time. [06:41] Our biases impact our memories and our present and future. [06:58] Because of the self relevance effect we find it much easier to recall memories about our self or things related to ourselves. [07:13] You are the hero of your own story, but even you don't remember your own story correctly. [07:20] Due to the fading effect bias, our brains like to feel positive emotions more than negative ones, so the emotions tied to bad memories will fade quicker than the emotions tied to positive events. This is likely tied to optimism bias and our ability to persevere through hardship. [07:54] Because of reminiscence bump, people do not remember things from all times of their life equally. Instead, people will have memories and be able to recall more personal events from happenings in early adulthood and adolescence than from any other time in their life. [08:35] We remember some time periods better than others, some items from years and years ago are able to be recalled "like it was yesterday." [08:55] Due to the telescoping effect, we tend to think of recent events as being further back in time, and those which happened longer ago are placed more recent in our minds. [09:14] The peak end rule – where experiences are not about the sum of that entire experience over time. Instead, it is about how it was at its peak and how it ended. [10:12] If something bad happened, it might be worth putting in some effort to make sure that is not the last experience and instead have it be a midpoint negative item if you can, that becomes outweighed by some very positive peaks over time. [11:05] The tip of the tongue phenomenon. I am sure you have had this frustrating experience at least once – when you can almost remember something…and the word or phrase or moment or name of that movie is "on the tip of your tongue" – right? This is thought to happen due to blocking, when multiple memories that are similar to each other are being called upon at the same time. [12:23] A false memory is when we accidentally think something we imagined really happened, and misattribute it as a memory. [12:55] Think about selling – confidence is key to selling. Try and imagine what it would be like if you had done this successfully already, think through the whole memory to help make it as real as possible. When you believe it, that could make future selling easier. [14:02] Our brains are powerful, but they are easily manipulated too. [14:40] The illusion of truth effect. Essentially, people are more likely to believe something they have heard before – or are familiar with – than something they have never heard before (or are unfamiliar with). [15:25] The opposite of a false memory is called cryptomnesia – when a real memory is mistaken as imagination because there is not the proper subjective experience of it being a memory. [16:54] We kind of smooth and average things out. This is why we tend to remember high values, likelihoods and probabilities as lower than they were, and low ones as higher. This is known as the conservatism or regressive bias. [17:39] You remember something that took a long time as not being as much as it really was, and because you are optimistic you will do even better the next time, you severely underestimate how long it will take. [18:12] HOW TO REMEMBER THINGS BETTER [20:04] Don't bog down your consciousness with stuff that can be found easily. Make room for other stuff that can't be found easily. [20:35] Repeated exposure over a long period of time is better than cramming it all in last minute. [21:12] It's easier to remember something in the right context. [22:23] It's easier to remember happy memories when you're happy and sad memories when you're sad. [23:24] Repeating information out loud can help you remember it this is called the generation effect. [24:38] Having the general message should be enough to help you remember. [26:13] Note cards with images could help you remember. [27:35] Stuff that takes longer to read and process is easier to remember. [29:12] Put the most important things on the list at the end. This is because of the modality effect. [30:21] In networking situations or in meetings…are you always waiting for someone to take a breath or pause so you can speak? That is a sign you aren't really listening to others when they speak, because you are creating a next in line effect all the time. [30:48] Being a good listener is key to building relationships in life and business. 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: @walidkoleilat on Twitter Episode 47. A Behavioral Economics Analysis of Costco Episode 42. Apple Card: A Behavioral Economics Analysis COGNITION Chapter 6: MEMORY DISTORTIONS Fundamentals of Cognitive Psychology Episode 45. Overview of Personal Biases The Science of 'Accidental' Joke-Stealing and Plagiarism Episode 32. The Overwhelmed Brain and Its Impact on Decision Making

If you've been listening to the podcast for a while, you have likely heard me mention Costco before. They do so many things differently than traditional business might suggest is best or profitable, but they have found a way to make it work and their business thrives because of it. In this episode, I'm going to discuss how Costco rivals almost any store or brand, and how they don't do traditional marketing and advertising. I'll talk about how they invest back into the community, have a simple code of ethics, reward shareholders, and how having a membership model and plan can work if it's done right. Costco is the perfect brand for a behavioral economics analysis, because they do things differently, but in a smart, strategic way that makes their unconventional plan a huge success. Today, we learn why Costco is the powerhouse that it is (and what you can implement in your own business - even if your model is completely different). Show Notes: [04:19] Many consider Costco's biggest rivals to be Walmart / Sam's Club or Target – but depending on the section of the store…they pretty much compete with everyone: from Amazon, Home Depot and Best Buy to Expedia, Pizza Hut, Les Schwab and your local optometrist. [04:54] They participate in the community and reinvest in the company in a way that creates advocates, which reduces the need for traditional marketing. [05:32] That gets me to the core of Costco – their mission. It seems basic and generic enough, "to continually provide members with quality goods and services at the lowest possible prices." [06:06] But they differentiate with their Simple Code Of Ethics: Obey the law. Take care of our members. Take care of our employees. Respect our suppliers. And then, reward shareholders. [06:57] The Costco membership model. [08:01] A membership is good for the store because it encourages people to shop there to "get their money's worth" – this is loss aversion in action. And, this is not just triggered by perceived ownership…you actually have some real ownership because you have paid to be part of the in-crowd. [09:29] Costco has put a lot of work into making it a lifestyle choice. [10:22] Having time to slow down and experience with all the senses puts perceived ownership into overdrive. [10:54] This aversion to losses combines with the scarcity factor to encourage people to buy more. I'm sure items are scarce at Costco to encourage sales, but there is more to it than that. The high turnover of product and high efficiency model of Costco increases their profit margin and allows the whole model to really work. [11:31] They also have a very generous return policy. [13:22] The Costco food court is one of predictable beauty, which as you know is a perfect recipe for building habits. [15:28] And, of course, this increase in sales is made possible by one form of marketing Costco does believe in – free samples. Again, this is loss aversion and reciprocity at work. [17:12] If the item is an exclusive Kirkland Signature item, you know the exact thing isn't available in other stores. All Kirkland Signature products are carefully researched, tested, hand selected, or custom-created by Costco. They truly live their mission through the whole Kirkland Signature experience – of doing best by their members, employees and suppliers. [20:02] One reason samples increase sales at Costco is because there are not too many choices. [21:28] Happy employees means lower turnover, which reduces expenses. Happy employees also means a better experience for shoppers, which keeps them happy and coming back. And, knowing that you shop at a place that values their employees also makes shoppers feel good. [22:34] Costco also does a lot of work to support their local communities, with a focus on children, education, as well as health and human services for grants and donations. [24:00] Costco works with partners and uses the value of bulk buying with their suppliers. [25:09] It is about knowing profits matter, but they aren't everything. Squeezing out an extra 50 cents on hot dogs or rotisserie chickens – or allowing for a 16% margin on some products would make a huge impact on shareholder pockets, but it isn't worth the negative it would cost to the members, who come first. [27:04] No company's set up is something any other business can copy and paste. [27:29] Costco knows who they are and what their brand is there to do, and every decision they make is so easy because they can tie it back to the mission and code. [29:16] Is being a member of benefit that would work well in your business? Think about the value. [30:43] What do you stand for? Make it clear to yourself, employees, customers, and more. [32:04] Do you make it easy for people to buy from you? Are you encouraging them to get items or is it difficult? Can they get a test or sample? [33:42] Money back guarantees are worth it. [34:00] Should you incorporate a loss leader that benefits people and draws them in? [35:09] Think about the full experience. What can you be doing? [36:33] Everything matters, and it's always important to try things. 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: Unlocking the Secrets of the Brain @wagsRJ on Twitter Magic of Self Direction by David S Schwartz @BusinessBrosPod on Twitter Rich Dad, Poor Dad by Robert Kiyosaki A More Beautiful Question by Warren Berger Fierce Conversations by Susan Scott Costco's Mission, Business Model, Strategy & SWOT The Costco Story What is Costco's Mission Statement and Code of Ethics? Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 19. Behavioral Economics Foundations: Herding Episode 45. Overview of Personal Biases Episode 46. Biases Toward Others – Including Groups Episode 23. Behavioral Economics Foundations: Reciprocity Business Strategy Lessons From Costco Business Model Episode 24. Behavioral Economics Foundations: Sense of Sight Episode 28. Behavioral Economics Foundations: The Sense of Touch Episode 26. Behavioral Economics Foundations: The Sense of Taste Episode 25. Behavioral Economics Foundations: The Sense of Smell Episode 27. Behavioral Economics Foundations: The Sense of Hearing and Sound Episode 14. Behavioral Economics Foundations: Scarcity 12 of the weirdest returns Costco employees have ever seen! Episode 21. Behavioral Economics Foundations: Habits Episode 22. The Power of Habit Things You Didn't Know About the Costco Food Court Why Costco Food Courts Have Charged $1.50 for Hot Dogs Since 1985, According to Employees Costco's Great Pricing Strategy and Business Model Costco Builds Nebraska Supply Chain For Its $5 Rotisserie Chickens 5 Things You Didn't Know About Costco's Free Samples Episode 5. The Truth About Pricing Episode 35. Behavioral Economics Foundations: Nudges and Choice Architecture How Costco Became the Anti-Wal-Mart Costco's Simple Strategy For Outperforming Wal-Mart And Target Donation and Grant Eligibility Guidelines Costco Communities The Top 100 Retailers of 2018 Episode 43. A Guide for You to Create a Brainy Brand Episode 44. Rebrand, Refresh or Reinforce?

This is the second episode in the series on "all the biases" broken up into eight categories. Last week, I told you about all the personal biases (and the rules your brain uses to convince itself it is the most awesome and amazing thing in the world). Today, we are going to talk about all the biases that relate to other people and groups. We will start out with general biases, and then have sections about the biases that apply for people we are similar to and those we are different from. And, in case you are curious, the other six categories of biases we will cover in coming weeks are: memories, future versus present thinking, selective attention, math is hard, lazy brain, and finally novelty and stories. I'm so excited to break those all down for you! And as a reminder, this series is not about digging deep on any one topic, but instead giving you just a little taste of each bias and how you can use it in life and business. Each of these biases will likely get its own episode over time, but this will allow you to learn a little about them, and how they relate to each other, now. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [04:32] Intro to general biases toward other people and groups. [05:28] This first term is probably one you are familiar with: groupthink. This is essentially what happens when people are in groups, and either because they want to have a harmonious experience or not rock the boat…or just the herding mentality of humans, the people within the group start to make bad decisions. These could be irrational or different than what the person would choose to do if left to their own devices, and it is often in an attempt to minimize conflicts. [06:01] One way Amazon combats this is by having a silent start to meetings (and I linked to an article in Inc. about this in the show notes). Essentially, the leader of the meeting has to write a very well-thought out meeting prep document, which is presented at the beginning of the meeting, and everyone will sit and read it silently to themselves. [07:18] Shared information bias can be counterintuitive. [08:03] Bike shedding is when it's easier to talk about a simple topic instead of the one big topic that you should be talking about. [08:29] Be aware of the bandwagon effect in groups. [10:20] It's harder to build the snowball than to keep it moving so you will have more effort on the front end. [10:55] People look better and are more attractive when they're in a group then when they're by themselves. Remember, things are not always what they seem, so don't be intimidated. [11:57] Because of hostile attribution bias you might think that the group will be mean to you. [13:07] Stereotyping is a natural tendency and doesn't have to be hostile. It's expecting someone who's a member of a certain group to have certain characteristics. [15:04] Humans are complex and belong to all sorts of affinity groups that make up our identities. [16:09] The bulk of your perception of any person is based on their group affiliations and a stereotypical bias which may or may not be true or accurate for an individual. [17:52] Implicit association, which is how quickly a word comes to mind or matches with a previous word that was said. That can show how closely they are associated. [20:10] Because of the moral credential effect, if you have tended to not be prejudiced in the past…your likeliness to be prejudiced in the future is actually higher! [21:21] Fundamental attribution error is important to keep in mind when thinking about how we assess the actions and choices of other people. [22:10] When people experience the flip of this – thinking others' behavior is due to a situation and their own behaviors are more about their personality, it is called extrinsic incentives bias. [23:25] When you make an internal attribution error to the whole group instead of the individuals that make it up, it is called ultimate attribution error. [24:04] When we apply this bias to individuals instead of a group, it is called the halo effect. [25:50] And, my general advice is to be aware of it and try to think of other people as multidimensional, and remember that every group is made up of multiple, multidimensional people. [26:18] PEOPLE LIKE US 00:26:34] Alright, moving on to groups of people like us. In general, we like people who are like us more than people who are not like us. This is called the in-group bias, and people are more likely to give preferential treatment to people who they see as part of their own group, or who they think are like them. [27:57] Another place where in-group bias can come up is when hearing about a victim in a story. Defensive attribution hypothesis occurs when people assign more blame as their similarity to the victim increases – this can be both in physical attributes or situational similarities. [29:25] Anthropocentric thinking is when we use human analogies and thought processes when considering less familiar, non-human things. A common example would be noting that most humans think of death as a negative thing, they apply this same value to non-human entities, even though death is necessary for many ecosystems to thrive. [31:36] This is called anthropomorphism or (as you might remember from school) personification. When we see a dog smiling we think it is happy. [32:27] PEOPLE DIFFERENT FROM US [33:03] Reactive evaluation, which means we will think less of proposals or suggestions that we believe came from an adversary or someone not like us. [35:09] Be aware of these biases and how they impact your experiences every single day. [35:30] Try to identify your biases and see where you are unfairly judging or giving benefits to someone similar to you. [35:55] Let's open our minds and make the world a little less biased and a little more thoughtful shall we? 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: Jeannette Castañeda on Twitter Episode 18. Behavioral Economics Foundations: Priming Episode 19. Behavioral Economics Foundations: Herding Episode 45. Overview of Personal Biases 'Silent Start': The Brilliant (and Surprising) Meeting Method I Learned From Amazon's Jeff Bezos Hostile Attribution Bias 21 Things You Didn't Know About Bronies Brony Herd Census & State of the Herd Report Episode 33. Inside the Texas A&M Human Behavior Lab Dr. Palma from the Texas A&M Human Behavior Lab Moral Credentialing and the Rationalization of Misconduct Susan Boyle Audition HD - FULL Top 10 Professions Dominated by Women University of Phoenix: Red Socks Marketing Myopia Do Dogs Smile? The Science Behind the Looks We Get From a Happy Dog

This is the start of a new series on cognitive biases. To present the series in an organized fashion I found around 200 biases and then categorized them in a way that would be relevant to what we do here on The Brainy Business. I came up with eight categories, and I will go over each bias in the category in a pretty quick succession. A cognitive bias is an error in the way humans think. It's a way that is often not in our best interest. These biases aren't random. They are predictable and that is the basis for behavioral economics. This week we are talking about those personal biases that lead us all to believe we are uniquely talented and awesome…and generally better than everyone else. As you listen to the list, think about yourself – how have you experienced this in your own life? And also think about other people – have you seen this in others? How could you use that bias in the way you message to customers or attract people to your business? Show Notes [10:48] EVERYONE IS UNIQUELY TALENTED Optimism bias: Humans assume they are more likely to have a positive outcome in life compared to other people. [11:28] You want to look at ways you can use optimism bias to your advantage when setting big goals, but your day to day tasks should be more realistic and less than you think you can accomplish. [11:32] Planning fallacy is the tendency to underestimate how long it will take us to complete a task. [12:30] Do you ever find yourself with a list of 10 things you "need to do" today and you only end up getting through two? Understanding planning fallacy can help you do better in setting more realistic tasks (and therefore being happier - and more productive). [12:48] Naive realism is the belief that unlike other people, we see reality exactly as it is. [14:21] Try to be open to the perspectives of others. Your curse of knowledge will make this hard because you know a lot about your area of expertise. [15:01] In order to be successful in life and business, you need to be able to understand the perspectives of other people and how they differ from yours. [16:09] The false consensus effect is our tendency to overestimate how much other people agree with us. [17:41] Illusion of asymmetric insight this is when people think they understand their peers better than those same people understand them. [18:15] If you assume that everyone thinks you don't understand them as well as they understand you, it could be beneficial to ask them questions that help them explain more about themselves to you. [18:49] Illusion of transparency: people also overestimate their ability to know others, and the ability for others to know them. [19:56] False uniqueness bias is when everybody thinks of themselves and their business as a special snowflake with unique problems unlike anyone else's. [21:17] When you are communicating what you offer, use the Forer effect (also known as the Barnum effect) to your advantage. This could also be seen as the astrology effect or the fortune telling phenomenon: people tend to think statements that are vague and general enough to relate to a large group of people are highly accurate and "exactly them!" [22:42] Generalities can inspire people to take action, so keep that in mind when creating your messaging. [22:57] Illusion of control, which is your tendency to overestimate the influence you have over external events. [25:33] Egocentric bias is when you feel like you do more than the other person and because of our naive cynicism, we also expect other people to have this bias more than ourselves. [26:47] It's important to praise others for their contributions without diminishing your own efforts. [27:28] Social comparison bias: Because of self-preservation and wanting to stand out and be the best, we tend to favor potential candidates whose strengths are not in direct competition with our own. [27:50] Self serving bias, where we want to claim more responsibility for successes than the things we might have failed on. We want all the glory and none of the blame. [28:23] The spotlight effect is the tendency to overestimate the amount that others are focused on our appearance or the things we say or do. [28:53] Because everyone else is the center of their own universe as well, you can relax a little. [30:07] Because of the 3rd person effect everyone believes they're less likely to be influenced by mass marketing than other people. [30:40] A bias blind spot is where we see ourselves as less biased than others and tend to be better at spotting these cognitive biases in others than in ourselves. [31:23] Illusory superiority is where we overestimate our own desirable qualities and underestimate our undesirable qualities. [32:14] Restraint bias: We all think we have more restraint than others and generally overestimating our ability to resist temptations. [32:53] Trait ascription bias: We think others have very predictable personalities, moods and behaviors (that they are more one dimensional) and that we personally are much more dynamic. [35:14] The overconfidence effect: for certain types of questions, people will say they are 99% certain in their answers…but they are actually wrong 40% of the time. [36:24] Pro innovation bias, which is essentially having massive optimism about an invention or innovation. [37:48] REVISING IN HINDSIGHT [38:06] Post purchase rationalization is when people buy on emotion and then persuade themselves it was the right decision. [38:55] Choice supportive bias is where we say retroactively are choices were more informed than they actually were. [39:22] Illusion of external agency, which means we think our personal preferences are based on insightful influences and benevolence. [40:21] Illusion of validity, where we believe our judgments and choices were accurate. [40:43] Conservatism belief revision you would not sufficiently revise your belief. [41:13] Continued influence effect, where you continue to believe misinformation even after it has been corrected. 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: The Brainy Business on YouTube Torcom Talk on YouTube @ser_technology on Twitter Ser Tech Webinar Blowing Consumers Minds Using Behavioral Economics Episode 16. Behavioral Economics Foundations: Framing Ser Tech Webcasts Ser Tech Open Lending @thebrainybiz on Twitter @HBLtamu on Twitter Predictably Irrational Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 15: Behavioral Economics Foundations: Availability Episode 34. Behavioral Economics Foundations: Optimism Bias Exploring the "Planning Fallacy": Why People Underestimate Their Task Completion Times Episode 11. Behavioral Economics Foundations: Anchoring and Adjustment Episode 14. Behavioral Economics Foundations: Scarcity Five Most Daunting NFL Stadiums for Visiting Teams Scarlett Johansson & Brie Larson Play 'Who Saves the World? Girls!' Episode 32. The Overwhelmed Brain and Its Impact on Decision Making The Trouble With Overconfidence Episode 5. The Truth About Pricing

How do you know when it is time to rebrand? I've been getting this question a lot by clients and listeners on social media. This inspired me to do this episode on deciding whether to rebrand, refresh or reinforce. Last week, I launched into branding by discussing what makes a brainy brand and how you can use behavioral economics to help make your brand as strong as possible Now it's time to talk about rebranding, refreshing or reinforcing your brand (including when and why you would do each one). During this episode I am going to talk about the difference between rebranding, a brand refresh and what it means to reinforce your brand…as well as examples of each one with advice to help you decide when you should do each in your own business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [05:32] Questions like "Why did you start your business?" and "What is the dream?" are so important for overall brand conversations in companies of any size…but they can be particularly meaningful for small businesses. [06:07] The most common thing I find when I go through this process with clients is that they are not thinking out far enough into the future. They plan what they need to do to make money today instead of planning out a sustainable business for 5, 10 or 20 years in the future. [06:32] When I ask people what the ideal business would look like…they are usually building a completely different business today than what they want to have in 5 years. This is a recipe for being stuck in a business that runs you instead of creating a business and life you love. [08:37] When something is off, customers can feel it and it impacts everything. It could also make business owners who could have been really successful get resentful and not love their business. [09:15] When you get to a point where you need to rethink things many start to ask if they should rebrand. [09:34] When you have a brand that fits your company…one that resonates with customers…everything just clicks. [11:38] REBRANDING means you are changing everything: new name, new logo, new colors, maybe a new target demographic and new focus entirely. [12:36] REFRESH means you are planning to keep a lot of the central pieces of the brand – the name, basic logo and colors, but you are making some tweaks to tighten the message, shift the demographic, or maybe enter a new space. [13:18] REINFORCE is when you still take the time to (hopefully proactively) look at your brand and determine what is working and what isn't. [14:12] The goal of rebrands and refreshes is to get to a point where you can reinforce. You want a brand that everyone gets and knows and loves. [16:05] New Coke triggered loss aversion in customers with nostalgia and an emotional tie to the brand, which resulted in hoarding, angry phone calls/letters, and fear. [17:38] The rebrand actually made people think of Coke differently and inadvertently put it on a pedestal. Coke now knows that they are solidly in reinforce mode. [20:50] Being too literal is one of the top 5 wording mistakes businesses make. [23:28] Verity Credit Union went through a rebrand 10 years before I led the refresh, where we needed to realign with the values that mattered to the target market. [24:07] Local artists were contracted to show what truth meant to them in whatever medium they used. [26:02] We had an all-staff event where we talked about the research, unveiled the new logo, showed the first four commercials and talked about the future. People were so excited to be part of it. Brand awareness nearly tripled in less than two years. [28:41] When you find a brand that works down to the core and is authentically tied to the vision and goals of the company, you get into a state of flow and that's how you know that you found "it" and can move into the reinforce phase. [30:11] When deciding to rebrand, refresh or reinforce consider 1) everything matters, 2) think bigger, 3) are we asking the right question? and 4) always be thoughtful and strategic. [32:21] Whatever brings you to the "is it time for a rebrand?" question…it is a key moment in time to stop, breathe, take a step back…and think about the bigger picture. [32:48] Too many companies ask "Who are our current customers and what do they want?" Instead, ask this question... [36:32] The next question people tend to ask when looking at a rebrand is, "What can we salvage?" It should not be the goal to keep as much of the old stuff as you can to save money. Instead you should... [41:25] The main thing I want you to remember and think of in your own rebranding is that strong brands, the best ones that get seen and make a difference and stand out from the competition…had to step away from the herding mentality of what "everyone else does" to get there. 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: Episode 43. A Guide for You to Create a Brainy Brand Dani McDonough Photography Artwork By Dani Episode 4. Questions or Answers Episode 32. The Overwhelmed Brain and Its Impact on Decision Making Post-it Super Sticky Easel Pad The Real Story of New Coke Episode 9. Behavioral Economics Foundations: Loss Aversion Episode 19. Behavioral Economics Foundations: Herding Episode 14. Behavioral Economics Foundations: Scarcity Episode 15: Behavioral Economics Foundations: Availability Episode 41. Behavioral Economics Foundations: The S in NUDGES – Structuring Complex Choices Episode 2. The Top 5 Wording Mistakes Businesses Make Verity Credit Union Boom Creative Verity CU YouTube His Voice Is So Emotional That Even Simon Started To Cry! Real Beauty Productions Cadbury's Gorilla Advert Aug 31st 2007 The Fun Theory 1 – Piano Staircase Initiative | Volkswagen Kristen Bell and Her Cofounders Built a Company to Save Lives. But Growing It Wasn't So Simple The Brainy Business on Facebook