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

Today’s behavioral economics podcast is about availability. This is another foundational episode that ties in to last week’s episode about scarcity. Similar to the bond between anchoring & adjustment and relativity, scarcity and availability can often be found together. There is also a free worksheet available for download that will help you apply today’s concept in your business. What do sharks, cows, toilets, buckets, and air fresheners have in common? They are part of the interesting concept of availability. Our brains get lazy and decide the likeness of something happening is based on how easily we can think of an example of it happening before, or how much we have heard about it. Listen on to hear how these random things work together, and for more interesting examples of this concept and how you can apply them in your business. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [06:05] Availability is about how easily something comes to our mind. [06:38] What comes to mind when I say the word shark? [07:32] What comes to mind when I say the word cow? [08:05] Even though, most people are afraid of sharks. There is less than one shark-related death in the US per year, but there are 22 deaths by cow. [09:41] We fear sharks more than other things that actually cause more harm or deaths because of availability. [10:18] The only time we hear about sharks are when they are attacking people. These examples are easy for our brain to remember, and we assume they happen more often than they do. [11:12] Our brains categorize cows as less dangerous. In spite of the actual statistics. [12:07] Daniel Kahneman dedicated chapter 12 of his book to the concept of availability. [13:52] With availability, our brain swaps out questions at hand with questions that we would be more likely able to answer quickly. [14:32] With availability it's about how easily examples come to mind. [15:31] Personal experiences and examples are more available than statistics. [16:16] Our subconscious brains love stories. [17:56] Your social media strategies should support what you are doing in your business. Use social media to gain a following in other things, not in the platform. [18:37] Do you know what movie increased tourism in Norway in 2014? [19:22] Norway had to cut their tourism budget, because they were overflowing with visitors. [20:49] In 1997, the sales of Mars Bars went up significantly (even though they did not change their advertising at all). This was because of the Mars rover. These are examples of how our brains associate things with each other. [21:47] When it comes to availability in your business, you need to associate your business with things that are going on around you. [22:57] In last week's episode, I gave examples of scarce items that flew off the shelf (from Starbucks, Disney and more). They were associated with things that were already popular at the time like the color rose gold. [26:10] Currently, a lot of people are talking about Nike and the Kaepernick Campaign. [28:16] In episode 4, I talk about one of my favorite books called A More Beautiful Question. I reference combinatorial thinking, which helps you get more ideas by combining things together that others may not think goes together. Instead of connecting A and B try to connect A and Z (or better yet, A and 26). [29:41] HARO is a website that connects reporters with potential sources. I reach out and respond with my unique perspective (sometimes it might seem random, but that is often better!) and I have been quoted in some articles. [32:38] Last week, I promised to revisit the story of how diamonds became the powerhouse that they are today. Diamonds actually aren't that rare. Diamond engagement rings didn't become popular until the 1940s. [35:42] De Beers had to create an illusion that diamonds were forever. [38:24] Young men had to view diamonds as an expression of love. They then used movies and magazines to reinforce this perception about diamonds. They also stressed the size of the diamonds. [40:22] By 1941, the advertising agency was able to increase the sale of diamonds by 55%. The sale was based on an idea of the eternal value of a diamond. [42:53] De Beers and diamonds is the original availability case study. They changed the face of the entire world forever. [43:23] Diamonds became a piece of our culture without us even realizing it. [44:37] They also did solid research into the mindset of the consumer and found new ways to get their message out. [45:23] Watch conversations and look for the right time to interject yourself. 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 4 Questions or Answers Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment Episode 12 Behavioral Economics Foundations: Relativity The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) Copy That Pops Cows Are Deadlier Than You Ever Knew Human Shark Bait In the War Between Sharks and People, Humans Are Killing It Thinking, Fast and Slow Why ‘Success’ on YouTube Still Means a Life of Poverty Frozen Has Massively Increased Tourism to Norway Contagious: Why Things Catch On Rose gold: The fashion trend that just won't go away A More Beautiful Question: The Power of Inquiry to Spark Breakthrough Ideas HARO Have You Ever Tried to Sell a Diamond? The 'Oprah effect:' Does everything she touch turn to gold?

Fall is a favorite season of mine and probably a favorite season to many of you. It’s also the time of year that my favorite honeycrisp apples are available. Like cotton candy grapes, these apples benefit from scarcity. Today, I break down what scarcity is and how you can apply this concept to your business. Scarcity is another concept in my lessons on behavioral economics foundations. Traditionally, scarcity is when an item is limited, but there is unlimited desire for that item. When we see something as scarce, we perceive that it has higher value. In today’s behavioral economics podcast, I will share stories and examples of how scarcity affects perceived value and how it relates with other foundational concepts like loss aversion. CLICK HERE FOR YOUR FREE DOWNLOAD! Show Notes [02:27] I love the fall, baking, and apple season. [03:12] My favorite apples, honeycrisp, are only available around certain times of the year. These apples have the benefit of scarcity, and that is what this episode is all about. [03:36] In today's episode, I break down what scarcity is and what happens in our brain when we perceive that something is scarce. I also give a lot of examples on how to implement this tactic in a business like yours. [06:00] Scarcity occurs when an item has limited availability, but unlimited demand. This includes resources like oil and water or more abstract resources like time. [06:22] We see things as more valuable when they are less readily available. [06:52] With a watch advertisement, people were actually willing to pay 50% more when they thought that the watch was scarce. [08:01] The most valuable stamp in the world, the British Guiana is valued at $11.5 million! [08:23] The first silver dollar printed and issued by the US government (called the flowing hair) sold for $10 million at auction. [09:32] Scarcity and value are closely tied together and for some reason our crazy brains think less is more. [09:38] Scarcity also triggers loss aversion. When something is scarce, we don't want to miss out on the opportunity to get it. [10:48] Examples of big brands using scarcity that you can use to apply in your own business. [10:51] Costco: People stock up when shopping at Costco, because they know that the great deal they find won't be there when they go back. Costco also has a great return policy to eliminate people's fear of making these purchases. [13:01] Starbucks: Right now it is time for the pumpkin spice latte. A drink made famous by Starbucks. Scarce items take on a life of their own. @theRealPSL even has its own Twitter account. [15:19] Scarcity can create cult followings which means other people do the marketing for you. [17:45] From rose gold Starbucks tumblers to rose gold Minnie Mouse ears, scarcity encourages items to sell. [18:40] These examples are a combination of scarcity and availability which will be the topic of next week's episode. [20:22] Real estate: Scarcity is implied. You can use words to trigger scarcity, such as limited time, extended, custom, handcrafted, one-of-a-kind, and close out. [21:21] There is value with holding firmly to specific hours. When you are booked you are booked. [21:52] When enforcing your hours, you need to say it with confidence. I talked about this in last week's episode about mindset. [22:51] If you aren't selling a product yourself, you can still you scarcity by putting on a contest. [24:07] The holidays are full of examples of scarcity. There are limited holiday treats, black Friday sales, and usually a big toy of the season. [25:26] When using scarcity think exclusivity instead of cheesy tactics. [25:50] Diamond engagement rings. Diamonds actually aren't that rare, and large diamond engagement rings weren't that popular until the 1940s. The concepts of scarcity and availability work together to make diamonds what they are today. [30:29] The diamond example is fascinating, and next week I will talk a lot more about it. Basically, they used scarcity to create perceived value. [32:49] You can book a strategy session with me for 10% off if you book by September 30. That 10% discount also applies to the workshop in Seattle on October 24. [34:08] I will be giving my Consumers Are Weird talk at the Arkansas Bankers Association Mega Conference in Little Rock next week - will you be there? [34:38] I will also be in Portland, Maine in a couple of weeks. Email melina@thebrainybusiness.com if you would like to connect. 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: TheBrainyBiz on Instagram Episode 2 The Top 5 Wording Mistakes Businesses Make The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them)What is 'Scarcity' Influence: Science and Practice (5th Edition) Narcissists as consumers: The effects of perceived scarcity on processing of product information Episode 8 What is Value? The Top 10 Most Expensive Stamps In The World The Five Most Expensive Coins Ever Sold at Auction Episode 9 Behavioral Economics Foundations: Loss Aversion Costco Business Model and Their Strategy @TheRealPSL on Twitter Episode 5 The Truth About Pricing Want a Starbucks Unicorn Frappuccino? Too bad. Most stores sold out Starbucks Coffee Rose Gold Pink Sequin 24oz Venti Tumbler Cold Cup The Rarest and Best Disney Mickey and Minnie Mouse Ears How ‘Tickle Me Elmo’ Caused Holiday Hysteria Back In 1996 Have You Ever Tried to Sell a Diamond?  

Mindset is something that everyone struggles with from time to time. Whether you are experiencing a lack of confidence or stuck with an “imposter syndrome” mentality, you have the power to change your mindset. Offering a new service, raising your prices, or entering a new market can all be triggers that can set off mindset issues. Today, I talk about how behavioral economics plays in, and how you can adjust your mindset by overcoming a couple of aspects where your brain is contributing to mindset problems. I talk about vicious/virtuous cycles, the confidence/competence loop, and how to shift your outlook. Of course, this episode features research and real life examples to help cement the concepts of this behavioral economics podcast. Show Notes [03:16] Everyone struggles with mindset issues occasionally. [03:32] Imposter syndrome is when you feel like a fraud. Experts estimate that 70% of people have felt this from time to time. [04:05] You could also have a lack of confidence around pricing or your offering. [04:23] I'm going to help you create a simple shift to break out of mindset problems. [04:39] A vicious cycle is where you get stuck in a downward cycle. Your brain fixates on small problems and makes them seem bigger. [04:58] There is also a virtuous cycle. This is good piling upon good. [05:15] The confidence/competence loop is a great example of this. [05:28] Confidence matters when it comes to sales. Being confident is what closes deals. [05:49] As you get more confident - you gain competence. [06:16] A real-life example of this virtuous cycle is when you increase your pricing and get so comfortable sharing that increased price that you are saying it like you are saying the weather. [06:49] Practice in the mirror and say it out loud until you really begin to own that price. [07:05] You need to do this because your buyers subconscious brain will pick up on the slightest hesitation. [08:03] I talked a lot about mindset in episode 10. I shared a story where I was hired as a reservation agent at Alaska Airlines when I was 18 years old. [08:42] My training was extensive. This job prepared me for the future. When you quote someone a price it doesn't matter what that price is. And it doesn't matter whether you would be willing to pay that price or not. [11:00] You need to sound confident and say that price as if it was nothing. My confidence could greatly impact the close rate for the airline. [12:04] A price is a price. I would read my script over and over all day. [12:29] Say it with a smile and wait as long as it takes. I was outwardly confident and calm. [13:22] At my first agency job, I learned how to quote high hourly rates. Always remember that you are worth your hourly rate. It was chosen for you for a reason and never doubt your worth. [16:22] You need to feel like you are worth it whenever you walk into a pricing situation. [16:43] The behavioral economics of mindset specifically around anchoring & adjustment and relativity. [17:32] Do not set the wrong anchor. We are exposed to more content in the social media world. [17:56] Don't think you can't launch until you meet some minimum standard. [18:22] Don't set your anchor against people who have been in business for a long time and have a giant team of people. [18:41] People who have the money to create a lot of content also have the money to create a lot of ads. This is why you are constantly seeing their information. [19:24] Reset your anchor and adjust down to a level that you and your clients can accept. [19:59] What are you presenting to the world while you are waiting for perfection? [20:31] The small steps approach applies to mindset, as well. [20:46] It's better to take one small step today than to sit and dwell on the big picture. [21:44] If you are taking small steps, relative to yesterday or the day before you are doing awesome. [22:52] I want to help you adjust your anchor to be on the reality of what you are doing instead of on what other people are doing. [23:33] When in doubt look to Dr. Seuss. [25:02] I love helping clients, and working with an expert can be the jumpstart you need to get unstuck. Remember - 10% off virtual strategy sessions and the October Workshop are only available through the end of the month. 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 12 Behavioral Economics Foundations: Relativity Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment Yes, Impostor Syndrome Is Real. Here's How to Deal With It Cognition and Performance: the Relation to Neural Mechanisms of Consequence, Confidence, and Competence Episode 5 The Truth About Pricing Episode 10 On Air Strategy Planning Session with Mariel Court 37 Dr. Seuss Quotes That Can Change the World

Our brains use relativity to make comparisons when assigning value. Relativity is one of my favorite concepts and part of the behavioral economics foundations. Today’s show builds upon last week’s behavioral economics podcast on anchoring and adjustment, because these two concepts are closely aligned. Relativity is all about value. In this episode, I dig deep into relativity to make sure you really understand what it is. Then I get into all the examples for varying industries and circumstances, so that you can apply this concept in your business. I also talk about how to increase sales by creating three offerings.   Show Notes [07:00] Last week we talked about anchoring and adjustment. I also mentioned relativity several times in the behavioral economics podcast, because the two concepts are very much aligned. [09:59] In behavioral economics, relativity is about value. [10:50] How relativity applies to value. Our brains make comparisons to assign value to things. [11:54] When it comes to value everything is relative. Just like in the grilled cheese example (episode 8), we know that $200 is a high price for a sandwich because we can compare it to other things. [12:11] Our brains are constantly making comparisons between items. Even though, those comparisons aren’t always the most logical. [12:25] A simple example on how relative values can shift. [13:49] The will to save $15 depends on the item it is attached to. The difference between saving $15 on a dollar item and a $500 item is relative (but it shouldn’t be). [14:45] How people will drive across town to save on gas. Even though, the savings may not compensate for the time and expense of driving across town to purchase that cheaper gas. [16:58] An example of how silver medalists aren't happy with coming in second. [18:40] How to incorporate relativity in a retail shop. [18:59] Anchoring and adjustment works together with relativity. An example where seeing a $99 t-shirt when walking in a store makes the real price of the shirts seem much lower even though it may be higher than last year's price. [20:28] The purpose of the $99 shirt is to make other prices look low. [21:44] An example of how setting an expensive espresso machine next to another one will help it sell. The high anchor makes the other pricing look more affordable. [23:22] Three option pricing advice. Offer a best thing, something similar but worse, and something completely different. [23:50] I share how this worked in my online strategy session in Episode 10 On Air Strategy Planning Session with Mariel Court. [24:30] In the earring comparison example, find a favorite color or birthstone to create a comparison example. Have a slightly more expensive pair that is more than double in size. This uses relativity to show the better value. Also include a completely different pair that is at least the price of the best pair. [26:07] When given three choices most people will pick the middle choice. [26:09] A furniture store example. Start with the most expensive option and work your way down. You want to set a high anchor not a low anchor. [28:10] A real estate example by Dan Ariely. [29:09] We like to make decisions based upon comparisons. Even if those decisions aren't rational. [30:10] Including a decoy will help create a point of comparison. [30:52] An example of the value of relativity from The Economist. Using relativity to sell subscriptions. [32:29] How removing an option that no one buys makes sales go down. This is the power of relativity in action. [33:46] When setting prices consider the decoy. If you are offering a service, look at the packages you are offering. Have a great value and a worse value and then a completely different product. Your brain wants to feel like it completed the due diligence to make the best decision. [35:58] An example of how a high priced bundle actually made another high-priced offering seem affordable. [37:22] A diet example that compares calories burned to calories consumed. You have to run 50 minutes to burn off one can of soda. Finding the right point of relativity can help encourage healthy behavior. [39:43] Hopefully you can see ways to incorporate relativity into your business. [42:19] Be sure to tune in next week for one simple mindset adjustment that will change your life and business forever. 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: Stacking Your Team Episode 11 Behavioral Economics Foundations: Anchoring and Adjustment The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) or text BRAINY to 345345 Einstein's Theory of General Relativity Episode 8 What is Value? Episode 5 The Truth About Pricing There is no silver lining: The hilarious pouts of the Olympians who went for the gold - but wound up in second place The Relativity Mind Trap: How Comparisons Can Lead Us Astray Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions Thinking, Fast and Slow Episode 10 On Air Strategy Planning Session with Mariel Court Clicksuasion Podcast Reality Check: To Burn Off A Soda, You'll Have To Run 50 Minutes

Today’s behavioral economics podcast is another foundational episode focusing on anchoring and adjustment. My last foundational episode was Episode 9 - Behavioral Economics Foundations: Loss Aversion and even though it has only been out about a week, it has been one of my most popular episodes to date. You listeners know one of my all time favorite studies features anchoring and adjustment, and it is also one of the main concepts in my signature talk Consumers Are Weird. In business, anchoring and adjustment can be used to help influence the subconscious brain to lean toward a certain number. Skillfully using this concept to persuade someone to agree to a higher or lower number or quantity can close sales, increase conversions, and help in all kinds of negotiations. In today’s episode, I give business examples in several scenarios including a jewelry store, furniture store, real estate, car sales, multi-level marketing, service companies, non profits, and more. Show Notes [05:58] This is the second behavioral economics foundation's episode. The first one was about LOSS AVERSION, and it was super popular. [07:14] Today's foundational topic is ANCHORING AND ADJUSTMENT. [10:21] One of my all-time favorite studies is on anchoring and adjustment. This is one of the main concepts in my signature talk Consumers Are Weird. [11:06] When your subconscious brain doesn't know the answer to something that takes a guess. [11:24] As our brain processes at 11 million bits per second, it is using these judgement calls a LOT to guide you through your day and life. [11:50] Our brains are all about shortcuts.When we are given an anchor number, it will influence our guesses.   [15:00] I share a story of having listeners at a presentation I was giving think about the last two digits of their social security number and then estimate the value of my necklace. The results demonstrate how anchoring and adjustment work. [16:56] These anchors only work if they are entered into your mind right before the question is asked. This is called priming (a focus for a future foundations episode). [17:14] My favorite study selling Snickers bars. The sales were increased by 38% when the number 18 was used instead of the word them. This was anchoring and adjustment at work. [19:46] Limits also affect the amount purchased. A limit of 12 doubled the amount purchased. [21:11] I was featured in a back to school shopping article on highya.com and warned about watching out for quantity discounts. [21:28] Seeing an expensive item when you walk into a store can anchor your brain to think that the same items for less money, even though they are still expensive, are a good deal. [23:09] How to apply anchoring and adjustment in your business messaging. [23:29] JEWELRY STORE In a jewelry store. Using too low of an anchor can be a mistake. If you give a low starting number, it will become the anchor. [25:26] Instead, start with the most expensive item, then what the average customer spends and then say there are many options under a certain number. [26:37] REAL ESTATE With big-ticket items like homes, you're already working with a number that is unrealistic and often too low. This is what someone wants to spend. [27:08] The buyer needs to disconnect from that number in their mind to be realistic with the current prices. [27:15] When comparison shopping, start with the most expensive house on the list. [28:17] If you are driving with the client, drive through the most expensive neighborhoods. What you show them (or what their subconscious sees and notices) and what you say matters. [29:13] FURNITURE OR OTHER STORE You can use the same tactics if you work in a store. Be mindful what you walk the customers past. [30:34] CAR SALES Selling something with a lot of options and features. You can 1) present a baseline model and all of the additional options to choose from or 2) present them with the top of the line vehicle and let them add or delete features. People will buy more expensive vehicles and packages when presented with the second option. [32:14] MULTI-LEVEL MARKETING Present the most expensive item first and work your way down. Incorporate bundles and give people the option to remove what they don't want. [33:37] SERVICE-BASED BUSINESSES I had two different people in service-based businesses recently implement my advice and have amazing results. [34:32] Using anchoring and adjustment changed Dawn's business. She created a $20,000 bundle (at no cost to her) and now her $10,000 products are flying out the door. [35:58] These simple brain tricks can help women entrepreneurs (and everyone else) make more money without really doing any additional work. [37:45] INSIDE A COMPANY Big numbers being thrown out can impact you. Mentioning an anchor number even if it is not the number that is going to be used will influence the value of the final decided upon number.   [42:33] LOW ANCHOR These low anchors can be helpful, but you need to be absolutely sure the claim is true. And I mean, all the time. Because if it isn’t, you are at a huge risk of the “bait and switch” brain reaction. [43:31] An example of promising how long it takes to learn a language. Be careful with low anchors because brains don't like being lied to. [43:54] NON PROFIT I have served on several boards, and we would discuss what numbers to suggest during fundraising. We thought a number that was too high would turn people off. This was before my extensive research and work in behavioral economics. If I was having that conversation now, I would know exactly what to say: “GO HIGH!” [46:37] With anchoring start with the highest number and work your way down for live auctions. [50:47] I will be in Little Rock, Arkansas in September and Portland, Maine in October for speaking engagements. If you are in those areas, or close enough to get there, send an email to Melina@theBrainyBusiness.com to talk about scheduling an in person session without the travel expenses! 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: Selling With Soul Podcast Dr. Robert Cialdini Episode 3 Do Lead Magnets Work and Do You Need One? Episode 9 Behavioral Economics Foundations: Loss Aversion Episode 1 Unlocking the Secrets of the Brain Episode 2 The Top 5 Wording Mistakes Businesses Make Episode 5 The Truth About Pricing The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) Free Download or text BRAINY to 345345 Episode 6 How To Sell From The Stage Episode 10 On Air Strategy Planning Session with Mariel Court Predictably Irrational by Dan Ariely An Anchoring and Adjustment Model of Purchase Quantity Decisions Seven Tips for Better Back-to-School Shopping Melina@theBrainyBusiness.com

In this behavioral economics podcast it is time to apply what I have been talking about in the first 9 episodes through this very first on air strategy session, featuring my guest Mariel Court. Mariel is someone I met in the BizChix Coop (which is Natalie Eckdahl’s Facebook group). We started a conversation when Mariel posted about rebranding her business. I have a background in branding and wanted to be a resource for her, so we became accountability buddies. Today, we showcase what incorporating behavioral economics into your business looks like. We ask questions to get at the core of what Mariel really wants. This is a real conversation in the form of a virtual strategy session. Mariel is the owner of Gypsy Moon Piercing (a body piercing and fine jewelry studio in Medford, Oregon). Today, Mariel shares her two biggest issues which are changing her name and talking about pricing. We focus on pricing and I provide recommendations incorporating behavioral to frame the issue. You can find Mariel Court here: Gypsy Moon Piercing Facebook PageGypsy Moon Piercing on Instagram@gmpiercing on Twitter Show Notes [05:48] Melina wanted to be a resource for Mariel, plus she was going through her own rebrand. [06:18] An on air strategy session showcases what incorporating behavioral economics into your business can look like. [07:15] We ask questions to find out what Mariel really wants. [07:36] This is a real process with no boxed solutions. [08:23] When someone books a virtual strategy session with me, it is conducted via a recorded video chat, which I provide to the client after the call for added value. [08:44] Mariel Court is the owner of Gypsy Moon Piercing, a body piercing and fine jewelry studio in Medford, Oregon. [09:03] Mariel's two biggest issues are the name change for her business and talking to people about pricing. [09:22] Sometimes Mariel feels that she is apologetic when explaining pricing to people, but it is also expensive to run her business. [09:56] She charges a $35 fee plus the cost of jewelry. Gold starts at $70 per piece. [11:34] Gold is handcrafted and a lot more can be done with it. [11:56] When buying gold jewelry, it will probably be more in the $150 to $200 range. [12:06] In the world of anchoring and adjustment when people hear “starting at $70” they will think the price should be $70 (or less). [13:29] Mariel feels she loses about three quarters of the phone calls that are about pricing. [14:45] Getting the caller to answer personal questions may be a better approach than talking about pricing right off the bat. [17:05] After finding out what the caller wants, recommend something more affordable like silver colored jewelry to keep the cost down. [17:57] Parents want to know that someone is going to take care of their kids. Put the parents and the kids at ease. [18:58] Use the person's name and pick out some jewelry that they may like. [21:56] We had a key turn in the conversation. Mariel's concern was talking about pricing, but it became clear that it was more of a mindset issue about how she approaches the pricing discussion. People ask about pricing because they don't know what else to ask. That is relativity which I talked about in episode 5. [22:38] The subtle shift of talking about value instead of price (covered in episode 8). [24:41] The value Mariel provides is with her impeccable taste in jewelry and her experience and how much she cares about people. Her reviews show this. [25:51] If you say the price apologetically, people will think you're overcharging them. [29:35] People buy on emotion. You want them to fall in love with the product before you ever talk about pricing. [31:23] Piercing could be a special day for moms and their daughters and become a really important memory. [33:55] Mariel does more jewelry sales than she does piercings. [34:21] She has an active Facebook group even though it's only three months old. [35:38] Choosing whether to focus on kids or adults and building an experience around that focus (pick a niche/avatar). [37:44] KEY POINT: Selling the experience as opposed to selling the price of the jewelry. [39:50] There are things that Mariel can do to make her customers feel special, like having a stuffed animal for the kids which would be included in a “princess package.” [41:14] The subconscious relies on emotion. Find the things that make them want to come in before they even visit the shop. [43:33] Once people have committed to a certain package, Mariel can show them upgrades, and they will feel like they are only paying the difference. [43:59] I would love to hear what you moms in the audience think about the suggestions we talked about. Would you pay more for the “princess” experience? Let me know in the comments. [44:35] KEY POINT: Incorporating behavioral economics into your business doesn't have to cost a lot. There are small things that can make a big difference. [44:47] Look at the brain's natural decision-making process and find the right way to incorporate your business with that. [45:04] The queen package I mentioned is a high anchor with relativity to make the princess package look more attractive. Listen to episode 5 for more on that. [46:37] BONUS! Because this is episode 10, I want to do a 10% off special for all my listeners! This can be applied to a virtual strategy session or the workshop I have coming up in Seattle on October 24th. [46:46] If you want to take advantage of 10% off a virtual strategy session, schedule a 15 minute consult call (which is free) by September 30, and if we end up working together, I will apply that 10% to whatever we deem is the best solution for you. 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: 6 Marketing Podcasts You Should Be Listening To Amy Porterfield BizChix Episode 4 Questions or Answers Episode 5 The Truth About Pricing Episode 8 What is Value? The Brainy Business Event (To take advantage of the 10% discount simply use the code BRAINY and book your ticket by September 30.)

Dive into the fascinating world of loss aversion, where keeping what we have matters more than gaining new items. Discover how this emotional bias affects consumer choices and impacts various industries, from finance to interior design. Hear a relatable story about kids and their toys that illustrates our irrational attachment to possessions. Learn how to harness loss aversion ethically in marketing while avoiding aggressive sales tactics that can backfire. Get ready to rethink your approach to business and consumer behavior!

I’ll be talking about the meaning of value on today’s behavioral economics podcast. The past three episodes have been dedicated to the “it’s not about the cookie” framework. Which shows that the experience leading up to the sale matters more than what is actually being sold or the price. I’ll talk about the difference between value, price and worth and the perceived worth created by the endowment effect. Then I really dive into every aspect of value and how it can relate to sales and persuasion. I talk about how value is often based in our minds and how much we love something. I share the importance of being realistic about price, worth and value when selling things. I touch on the the way that herding, perceived value, and loss aversion work together in things like bidding wars and more on this episode. Show Notes [03:29] Value, price, and worth are used interchangeably, but they are not the same. [04:57] Price is what someone is willing to pay for a good or service. [05:30] Opportunity costs means something can only be used once. [06:04] Worth is the expected selling price of something. Things have worth even if they are not being sold. [06:53] The endowment effect is the phenomena in our brains where simply owning something causes us to find more worth in it. [07:22] I share an example where people were given a lottery ticket and then refused to trade the ticket for two dollars, because once they were endowed with the ticket they could see value in its potential. [08:50] Value is the usefulness or desirability of a good or service. [09:16] Value is based on how much we love something. It's in our minds and it's personal. [11:54] How in real estate people often overvalue their homes because of the sentimental attachment. [12:32] How getting people to be realistic about the worth, price and value is very important when you are trying to convince them to sell something. [12:46] Herding is the brain's desire to be part of the crowd. [14:02] Our brains are trained to assume that the collective consciousness of the group knows more than our brains on their own. [14:22] Herding, perceived value, and loss aversion work together in things like bidding wars. Watch out when you throw scarcity into the mix. [14:43] An example of someone buying William Shatner's kidney stone. [17:23] The ripple effect of price as it makes its way through the herd. As in two billionaires in a bidding war for rare artwork. [19:12] I talk about the Basquiat painting that sold for $110 million dollars and the man who bought it. The purchaser wanted the painting because he was struck with excitement and gratitude for his love of art. [21:15] The power of brands and how they give companies value. [24:21] How our brains get what they expect and a quote from Dan Ariely the author of Predictably Irrational. [27:06] The value of a $200 grilled cheese sandwich. [28:00] Creating brand value with exclusivity and scarcity. [32:34] How brands tell a story about who we are, and our brains love stories. [33:02] Tahitian black pearls and creating value out of thin air. [35:47] With the pearl example, the price tag set an anchor. The Winston name added exclusivity and scarcity, and the glossy advertisement instilled confidence in the herd. [36:14] Our brains believe what they are told until they are told otherwise. [39:03] The placebo effect and how people actually think they get more value when they pay more. [40:02] How price and perceived value are linked in the human brain. [40:14] Measuring sticks for value like currency. [41:48] Value is subjective, in our heads, and it changes. 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: Cost vs Price vs Worth vs Value Episode 5 The Truth About Pricing Episode 7 Change Management (It’s Still Not About The Cookie) Anomalies The Endowment Effect, Loss Aversion, and Status Quo Bias Human Herding: How People are Like Guppies Brother, Can You Spare An Organ? Basquiat painting smashes record with $110m sale Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions People Try World's Most Expensive Grilled Cheese Episode 2 The Top 5 Wording Mistakes Businesses Make How Your Brain Keeps You Believing Crap That Isn’t True

The past two weeks have been dedicated to my “it’s not about the cookie” framework, which shows how the experience and all the things leading up to the sale matter much more than whatever is being sold itself. This week, I am extending this framework to one more application – change management. Think of this as any time you are trying to get someone to buy in and make a commitment where money is not exchanged. In this behavioral economics podcast, I talk about what change management actually means and how the “it’s not about the cookie” framework ties into change management. I talk about how using perceived ownership, the endowment effect, and loss aversion to your advantage in the beginning will pay off in the end. I also talk about how framing is not what you say but how you say it and how to overcome status quo bias. This is the most complex episode of the cookie framework, but it will give you proven tools to implement change. Show Notes [03:38] What the concept of change management actually means. [04:59] Change management or leading through change is something that a lot of people are talking about these days. [05:18] Change and getting people to change is all about selling them on your perspective and getting them to buy in and commit. [05:48] An example of trying to get your significant other or child to do something. [07:48] Ways to get the child to buy in may be making it fun, leading by example, and using distraction. [08:32] I often compare our subconscious brain to a small child. Much of our decision-making is still that on this level. [09:22] A small detail can hang people up when making positive changes. [10:30] How what the person selling the concept thinks is important may not align with what the person buying the concept may think is important. [10:52] Consider the ripples. One small word can have a different impact on different people. [11:21] An example from my credit union days. [12:51] When it comes to credit cards there will be several different groups affected. The messaging needs to be focused for the individual groups that matter. Keep the overall brand message consistent. [14:36] I'm not getting into habitual buying in this episode, but it is really fascinating and I will dedicate an episode to it soon. [15:17] It's important to think about what the specific people need to hear and where they are coming from before applying your messaging. [15:34] Thinking about the group as a whole instead of considering the individuals. [15:55] Office Space, Milton and the red stapler. [17:19] How our brains are very good at dwelling on small items. [17:42] When trying to sell change get ready for loss aversion to rear its head. The Endowment Effect, Loss Aversion, and Status Quo Bias [18:21] The endowment effect as the anomaly that our brains favor things they own over other things. [20:10] We go all in with things that we already have. [20:24] Loss aversion. People hate to lose things. It takes double the joy of a gain to outweigh the pain of a loss. [22:35] Status quo bias. When given the choice people tend to go with the status quo and favor it heavily. Be wary of giving people too many choices. [23:13] How all of this ties into change management. Using these concepts to your advantage is the best approach. [23:45] The five components of “it's not about the cookie.” The scent of the cookie, free sample, perceived ownership, today only, and buy three get one free. [24:26] The prep is critical for change management. [24:46] How the smell of the cookies breaks through your subconscious clutter. [26:33] How rumors about the upcoming change are like the smell of burnt popcorn. [28:04] Be thoughtful of how the meeting is framed. Avoid being too vague. [29:14] People need time to process. Share and be transparent. [29:32] Reciprocity - sharing information makes the recipient more likely to have an open conversation. [30:43] Perceived ownership is where people work harder for ideas that they came to on their own. Outline the information you present, so that the recipient will perceive ownership. [31:12] Do your homework when proposing a big change. [34:07] The importance of having advocates and thinking long-term when any change is implemented. [35:10] Using scarcity is optional in change management conversations. Use with caution. [36:45] Knowing what matters to each person helps facilitate the conversation with the desk moving example. [38:28] The problem with unintended ripples using the scarcity approach. [39:10] Framing is everything when it comes to change management. It's not what you say it's how you say it. [40:03] Decide what the one thing is that you want this person to do. Get the person invested in the outcome. [40:37] Frame your offer properly by pointing out the benefits. [44:07] If you thought this was the most complex of the scenarios in the “it’s not about the cookie” scenario, you’re right. There is a reason it was the final installment. [46:11] Change is all around us, and being able to lead people through it is important in any business. Turning naysayers into advocates is critical to your success. [47:28] Don't forget to tune in next week to Episode 8 What is Value? This episode will make it clear why the cookie framework is effective. 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 5 The Truth About Pricing Episode 6 How to Sell from the Stage Episode 7 Change Management (It’s Still Not About The Cookie) Get The 10 Behavioral Economics Concepts You Need To Know (And How To Apply Them) and join my mailing list at The Brainy Business Episode 1 Unlocking the Secrets of the Brain The Endowment Effect, Loss Aversion, and Status Quo Bias Episode 3 Do Lead Magnets Work and Do You Need One? Melina@TheBrainyBusiness.com Downsizings, mergers, and acquisitions: Perspectives of human resource development practitioners People management in mergers and acquisitions in Sri Lanka: Employee perceptions

Last week, I talked about The Truth About Pricing, you might want to listen to that episode before we dive into today’s episode about how to sell from the stage. Both are built on the same foundation. In the truth about pricing “it’s not about the cookie,” there were five components that I talked about. I have always loved being on stage from acting as a child to singing and improv classes. I don’t think I would be where I am today without this background. When it comes to selling from the stage, the same five components apply. I’ll be talking about these components of the scent of the cookie, free samples, perceived ownership, today only, and buy three and get one free as they apply to selling on the stage. Show Notes [02:28] Thanks to all of my new listeners and downloads. [03:18] I love being on stage and grew up acting and dancing. I was also a vocalist and even competed in Opera. I am also in the Screen Actor's Guild and sang with a country band in Seattle. I also sang the National Anthem for the Seattle Mariners. [06:30] I know how to be on stage and work with an audience. [07:24] Being on stage is no different than selling. [07:45] A quick recap of last week. [07:58] How an expert at selling can get a customer drooling like Pavlov's dog where an amateur may not even be able to sell the same product. [08:15] It's all in the delivery and in the right order. I unlocked this method in episode 5. [11:02] How the scent of the cookies forces your conscious brain to do what the subconscious wants it to do. [11:52] You want to build your pricing on this foundation. Even if you are selling on stage. [12:32] Conversations are based on this concept as well. Buying and selling is not always about exchanging money. [12:56] Next week, I will extend this scenario to change management and non-monetary conversations. [13:29] The five components were the scent of the cookies, the free sample, perceived ownership, today only, and buy three get one free. [14:07] A master of selling can get the audience excited about anything that they want to sell. [15:08] The smell of the cookie flags your conscious brain. If you are a speaker, the audience is focused on you. [16:16] Using the 80/20 rule when speaking. 80% of your sales will come from 20% of your audience. [17:40] The scent of the cookies is the title and description of your conference. [20:55] Have an interesting title that is different and makes people want to learn more. [23:42] Incorporating questions into your titles and descriptions. This engages the mind differently. Use questions that will make people say yes. [27:00] The free sample phase of public speaking is when you give your customers a taste of what it would be like to work with you. [28:12] Perceived ownership or reminding the audience of things that are important. [31:34] There is a delicate balance between selling and sprinkling in what it would be like to work with you. [33:19] Today only or a special offer if you act now. This is the concept of scarcity. Watch infomercials for an example of this. They work, because they speak to the subconscious part of the brain. [37:01] The average of people who ask for refunds is about 5%. [37:30] Money back guarantees encourage buying and spending more. [38:44] Buy three get one free. The brain likes things that sound better. The way you frame the message impacts with the brain hears. [40:01] FRAMING is everything – and just as with pricing, it isn’t what you say…it is how you say it. [40:57] Two types of public speaking. The hard pitch uses the tactics of relativity, anchoring, and adjustment. [41:58] The informational pitch is more of a long term strategy and it is about 80% of presentations. This is the tactic I take. [42:43] Sprinkling in additional resources that can further learning go way beyond the presentation. [43:24] Offer the one thing that you would want your audience to do. [44:41] In most public speaking the sale is actually a freebie that gets people into your family or on your list. [46:35] This method in these formulas work. You can use the free worksheet to implement this strategy. 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 Truth About Pricing The 80/20 Rule And How It Can Change Your Life The Top 5 Wording Mistakes Businesses Make Questions or Answers Unlocking the Secrets of the Brain The Buying Brain: Secrets for Selling to the Subconscious Mind The mind's mirror Good For You, Better For Them: The Truth About Retailer Guarantees Thinking, Fast and Slow, Daniel Kahneman Do Lead Magnets Work and Do You Need One?